Beta management company case

beta management company case summary

People saving more and prefer durable goods in recession. While business was slow at first, she gradually developed a client base through good performance and word of mouth.

Case Study: Beta Management Company In early January , Sarah Wolfe was in her office considering new goals and directions for her company forth coming year. In other words, individual risk can be diversified away in a portfolio. Wolfe was proper and efficient. One of the major issues in determining the expected return on capital assets is to use the right risk free rates. In our case, we have used 10 year Treasury bond rate as the measure of the risk free rate. How does each stock affect the variability of the equity investment? Hence, investor or broker should look at the portfolio variance.

Still, she had some doubts. This is because covariance or correlation among the stocks is more important to determine the riskiness of portfolio than the individual stocks. A risk averse investor, as a universal assumption, would choose to reduce its risk through portfolio diversification.

In this case, it is better for Ms.

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Thus, Brown Group stock is more risky. After acquiring sufficient fund and expertise, she was transforming her investment strategy which is increase the portion of the equity asset in addition of picking one from the two analyst-recommended stocks. Relate your answer to question 3. Its investment and stock price has been seriously damaged by the World Series earth quake.

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