Expected and volatility of stocks in economies


Consider the following two, completely separate, economies. The expected and volatility 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 prices of other stocks. Assuming you are risk-averse and you could chose one of the two economies in which to invest, which one would you choose. (three to four (3-4) pages required)

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Expected and volatility of stocks in economies
Reference No:- TGS052706

Expected delivery within 24 Hours