Finance 331 Discussion Questions Set #2

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Please post your initial responses to the following questions in a new thread, and comment on others' under their corresponding threads.

Please respond to the following questions:

1. Is it possible to form a low risk portfolio by combining two very risky stocks in the portfolio? Explain why or why not.

2. Beta and Standard Deviation (S.D.) are the two fundamental measurements for risk in Finance. Look for your "assigned company" in the attached "Company List" file, and follow the instruction below.

(1) Find "your company's" beta:

Find your company's beta from the Yahoo Finance link below, by keying "your company's" ticker symbol (listed in the last column in the Company List file) into the "Quote Lookup" box at the upper right corner. (The one shown in the link is Target's summary information. You need to key in "your company's" ticker symbol to see your company's summary information, where beta is one of the items listed there.)

https://finance.yahoo.com/quote/TGT?p=TGT

(2) Find your company's standard deviation (S.D.):

Find your company's standard deviation (S.D.) from the following link, and key in your company's ticker symbol to the box right after the word "Symbol" in that link and hit the red "Refresh" button:

(Notes:

** The one shown in the link is Target's S.D. You need to key in "your company's" ticker symbol to see your company's S.D.

*** It is free to use from the following website. But, there might be a limit of number of times (e.g., maximum two times) that you may try before they require you to provide your information to them. So, make sure that you key in the company's ticker symbol correctly at the first or second time.)

https://www.macroaxis.com/invest/technicalIndicator/TGT--Standard-Deviation

(3) Find S&P 500 Index's standard deviation (S.D.) by keying in S&P 500's ticker symbol (^GSPC) in the link above. Then, make a table such as the one listed below and fill in the numbers that you found (Note: Since S&P 500 represents the market as a whole, by definition of the beta you should know what S&P 500's beta should be without checking):

Beta

Standard Deviation

“Your Company”

S&P 500 Index

(4) Is your company's beta larger or smaller than S&P 500's beta? What does it mean if it is smaller (or larger) than S&P 500's beta? (Check the definition of beta)

(5) Is your company's S.D. larger or smaller than S&P 500's S.D.? What does it mean if it is smaller (or larger) than S&P 500's S.D.? (Check the definition of S.D.)

(6) If your company's beta is larger (smaller) than S&P 500's, then would you expect that your company's S.D. also has to be larger (smaller) than S&P 500's? Why or why not?

Unformatted Attachment Preview

COMPANY LIST FOR DQ 2 Name Company Name Ticker Symbol Abadom, Ian Apple Inc. AAPL Audet, Julia Microsoft Corporation MSFT Ball, Huw Tesla, Inc TSLA Dowdy, Nate Alphabet, Inc. (Google) GOOGL Facebook, Inc. FB Harting, Daniel Twitter, Inc. TWTR Henderson, Joshua Amazon AMZN Humphrey, Jimmy Nvidia Corporation NVDA James, Deja EBay, Inc. EBAY Jang, Eunyoung Oracle Corporation ORCL Johnson, Cheja Cisco Sys., Inc. CSCO Jordan, Madison Home Depot, Inc. HD Lee, Jasper IBM Corp. IBM Li, Ivy Ford Motor Co. F Moise, Tahina Citigroup, Inc. C Nam, Kyung Min Exxon Mobil Co. XOM Nisevic, Ognjen AT&T Inc. T Paul, Camille Walmart Stores WMT Reames, Ryan Pfizer Inc. PFE Rhodes, Tucker Bank of America BAC Flores, Jackelyn 1 Sangi, D BP Plc BP Scheck, Anna Adobe Systems Inc. ADBE Schultz, Nicole Boeing Co. BA Schwartz, Kateryna Verizon Communications Inc. VZ Scott, Brian Coca Cola Co. KO Simao, Jessica Comcast Co. CMCSA Sterling, Andrew E*Trade Financial Co. ETFC Tasker, Darlene United Parcel Service, Inc. UPS Townsend, Malik Yelp, Inc. YELP Ugwuliri, Chinonyerem HP, Inc. HPQ Whalen, Rachel Alibaba Group Holding BABA Wynter, Ashley FedEx Corp. FDX 2
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Explanation & Answer

Hello.I have nicely finished your work. Kindly find it attached below. It was nice working with you and I hope to work with you again.Feel free to always consider me.

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1. Is it possible to form a low risk portfolio by combining two very risky stocks in the

portfolio? Explain why or why not.

Yes, it is very possible to form a low risk portfolio by combining two very risky stocks in the
portfolio. This can ...


Anonymous
Great study resource, helped me a lot.

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