S. RISk ahd retun-Implications for managers and investors Aa Aa The concept of r
ID: 2821601 • Letter: S
Question
S. RISk ahd retun-Implications for managers and investors Aa Aa The concept of risk and return is subjective for different people, as well as for corporations. Read and assess the following financial decisions. Keeping everything else constant, are the following actions good financial decisions? Base your decisions on the understanding of risk and return, solely from a theoretical finance perspective Good Financial Decision? Joe is an average investor. His financial advisor gave him options of investing in stock A, with a of 12%, and stock B, with a of 9%. Both stocks have the same expected return of 16%. Joe can pick only one stock and decides to invest in stock B. Yes No Good Financial Decision? Joe is an average investor. His financial advisor gave him options of investing in a company's stock A, with o of 12%, and stock B, with a of 9%. Both stocks have the same expected return of 16%. Joe can pick only one stock and decides to invest in stock A Yes No Mr. and Mrs. Smith are in the middle of their Investment planning, so they hire a tinancial planner. In their discussions with tha financial planner, they include their investment timeline and the length of time that they can keap investing. This helps Mr. and Mrs. smith come up with an investmment objective and a financial plan. Good Financial Decision? Yes NoExplanation / Answer
Yes (since B has lower risk due to lower standard deviation)
No (Since he has chosen a riskier stock)
Yes
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