Assignment

Select Only One For Your Response

Respond to one selected question giving real-world examples to support all your answers.

1. What makes for good diversification in a portfolio investment? How do you achieve diversification?
2. To get the benefits of diversification, stocks in a portfolio should not be perfectly positively correlated. What are some examples of stocks that are strongly positively correlated? Why are they positively correlated?
3. If you were constructing an efficient portfolio, would you first define an acceptable level of risk and then seek to maximize return? Or would you first define a desired level of return and then seek to minimize risk? Do you think the two methods would lead to similar or significantly different portfolios?
4. The disclosure requirements for mutual funds and hedge funds are significantly different. Why do you think this is so?

Write your answer to the question in approximately 600-800 words formatted in the current APA style. All written assignments and responses should follow APA rules for attributing sources.