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NEW QUESTION: 1
You currently own Cavanaugh Inc. and are thinking of adding either Coe Co. or Firm Co. to your holdings.
All three stocks offer the same expected return and total risk. The covariance of returns between Cavanaugh and Coe is +0.5 and the covariance between Cavanaugh and Firm Co. is - 0.5. Portfolio's risk would:
A. decline more if you bought Firm Co.
B. decrease if you bought Coe Co. but increase if you bought Firm Co.
C. would decrease most if you put half your money in Coe Co. and half in Firm Co.
D. decline more if you bought Coe Co.
Answer: A
Explanation:
Explanation/Reference:
Explanation:
In portfolio composition questions return and standard deviation are the key variables. Here you are told that both returns and standard deviations are equal. Thus, you just want to pick the companies with the lowest covariance, because that would mean you picked the ones with the lowest correlation coefficient.
[++ 2where==so you want to pick the lowest covariance which is between Cavanaugh and Firm.
NEW QUESTION: 2
A. Option D
B. Option A
C. Option C
D. Option B
Answer: B
Explanation:
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Click the Exhibit button.
A technician is asked to review the existing route information for the customer.
According to the printout shown in the exhibit, type of route is this?
A. An analog route
B. A direct inward dial route
C. An outgoing only route
D. A media services route
Answer: D