(many of the answers can be quite short, but some require more information). Include the questions in your write-up.<\/p>\n
How do you calculate stand-alone expected return?<\/p>\n
How to you calculate stand-alone risk?<\/p>\n
Explain what standard deviation is to someone who does not understand any statistics.<\/p>\n
You are going to create a portfolio of two different stocks (50 percent of each in the portfolio). Why can\u2019t you usually take the weighted average of the two individual stock\u2019s standard deviations to calculate the portfolio risk?<\/p>\n
Why does the average 2-stock portfolio give you the same expected return as the average 1-stock portfolio?<\/p>\n
Why does the average 2-stock portfolio give you lower risk than the average 1-stock portfolio? (don\u2019t use coin flip example in your answer)<\/p>\n
Why are there diminishing returns to diversification? That is, as you add more stocks, the marginal benefits go down. Why?<\/p>\n
How did we calculate beta of McDonald\u2019s? Explain in detail.<\/p>\n
Explain the difference between micro and macro risk.<\/p>\n
Do you receive compensation for bearing micro risk in the CAPM? Explain<\/p>\n
Questions 11-13 use the following information: Assume there are 2 portfolios. Portfolio A holds just McDonalds and has a beta of 1.1. Portfolio B holds 100 different stocks and has a beta of 1.1.<\/p>\n
Which portfolio has a greater standard deviation? Why? Explain<\/p>\n
Which portfolio has the higher expected return according to CAPM? Explain.Why?<\/p>\n
Draw the scatterplots of the two portfolios relative to the Standard and Poor\u2019s 500.<\/p>\n
What is the shape of the security market line? Explain. Draw the graph.<\/p>\n
What did Fama and French find out about the CAPM? Explain.<\/p>\n
Instead of Beta, what did Fama and French find that worked better than beta? Explain.<\/p>\n
Why do we continue to use CAPM despite it not working? Talk about QWERTY in your answer.<\/p>\n","protected":false},"excerpt":{"rendered":"
(many of the answers can be quite short, but some require more information). Include the questions in your write-up. How do you calculate stand-alone expected return? How to you calculate stand-alone risk? Explain what standard deviation is to someone who does not understand any statistics. You are going to create a portfolio of two different […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[10],"class_list":["post-78883","post","type-post","status-publish","format-standard","hentry","category-research-paper-writing","tag-writing"],"_links":{"self":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/78883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/comments?post=78883"}],"version-history":[{"count":0,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/posts\/78883\/revisions"}],"wp:attachment":[{"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/media?parent=78883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/categories?post=78883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/papersspot.com\/blog\/wp-json\/wp\/v2\/tags?post=78883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}