MC short selling and efficient portfolio choices
Not what you're looking for?
1- You wish to sell short 100 shares of XYZ Corporation stock. If the last two transactions were at 34.10 followed by 34.15, you only can sell short on the next transaction at a price of :
a. 34.10 or higher.
b. 34.15 or higher.
c. 34.15 or lower.
d. 34.10 or lower.
2- Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks.
Stock A Stock B Stock C
Stock A _1.0
Stock B _0.9 _1.0
Stock C _0.1 _0.4 _1.0
Given these correlations, the portfolio constructed from these stocks having the lowest risk is a portfolio:
a. Equally invested in stocks A and B.
b. Equally invested in stocks A and C.
c. Equally invested in stocks B and C.
d. Totally invested in stock C.
Purchase this Solution
Solution Summary
MC addressing short sales and building most efficient portfolios given correlations.
Solution Preview
1, b. 34.15 or higher. When selling short the idea is that you sell "borrowed" shares today in hopes that the price goes down, then you close the short sell by buying at the lower price. This is a strategy if you believe the stock is really overpriced and will fall or you speculate that it will fall for other ...
Purchase this Solution
Free BrainMass Quizzes
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.