Beta Management Company free essay sample

Brown Group stock will add more variability to the portfolio because the portfolio including Vanguard 500 and Brown Group stock has a higher standard deviation. Based on the results of question 1, California REIT stock is riskier because it has a larger SD. However, according to question 2, Brown Group stock is riskier. It should be Brow Grown stock muck riskier because the covariance between the Vanguard and Grown Group stock is most 8 times of that between the Vanguard and California REIT stock. The portfolio includes Grown Group stock is riskier. The Grown Group stock has a higher beta so it is riskier. It is more sensitive to the market factor. Question 5: The Grown Group stock should have a higher expected return because it is riskier. It is matched with the result in question 1. However, in the market, the riskiness of the stock depends on the covariance between the newly-added stock and Vanguard 500 in this case. We will write a custom essay sample on Beta Management Company or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The higher covariance, the newly-added stock is riskier. Also, the result accords with the investment trend that the riskier a stock is in the portfolio, the higher return it is.