Posted by **Anonymous** on Monday, August 2, 2010 at 9:08pm.

Consider the following two, completely separate, economies. The expected return violatility of all stocks in both economies is the same. In the first economy, all stocks move together-in good times all prices rise together and in bad times they all fall together. In the second economy, stock returns are independent –one stock increasing in price has no effect on the price of other stocks. Assuming you are risk –averse and you could choose one of the two economies in which to invest, which one would you choose explain.

- Coporate finance -
**Ms. Sue**, Monday, August 2, 2010 at 9:20pm
I'd invest in several stocks in the second economy. I'd be taking less risk because while some stock prices may fall, others will probably rise. The first economy is like putting all of your eggs in one basket.

- Coporate finance -
**Anonymous**, Friday, August 13, 2010 at 5:19pm
Ambrin Corp. expects to receive $2,000 per year for 10 years and $3,500 per year for the next 10 years. What is the present value of this 20 year cash flow? Use an 11% discount rate.

## Answer this Question

## Related Questions

- Finance - Consider the following two, completely separate, economies. Te ...
- finance - 5. Consider the following stocks, all of which will pay a liquidating ...
- Statistics - Suppose that the percentage returns for a given year for all stocks...
- statistics - Suppose that the percentage returns for a given year for all stocks...
- Finance - we have two stocks Stock A and Stock B, Both stocks have the same ...
- statistics - Suppose that the percentage returns for a given year for all stocks...
- Finance - Calculate the return and standard deviation for the following stock, ...
- finance - Use the capital-asset pricing model to predict the returns next year ...
- Finance - 21. Consider an economy with two types of firms, S and I. S firms all ...
- Finance - Suppose you are considering two investments, stock A and stock B. The ...