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Diversified Risk and Capital
Part 1, you will create a portfolio of 5-8 stocks that demonstrates diversified
risk. List the stocks along with their current price and previous 1-year and
5-year rates of return. Below the list of stocks respond to each question in
– Explain the difference
between portfolio risk and stand-alone risk.
– How does risk aversion
affect a stock’s required rate of return?
– Explain the
distinction between a stock’s price and its intrinsic value.
For the purposes of Part 2, a project is
defined as any endeavor that had a capital outlay. Pick a project you have
recently completed or one you would like to complete in the near future. This
could be a project in your home, place of work, or even church or other
organization you are familiar with. Respond to the following prompts:
your project with a reflection on the importance of selecting the right
projects in which to invest capital.
the relationship between risk and return, and how you would measure for both in
how you would calculate the weighted average cost of capital (WACC), and its
components for your project.
Parts 1 and 2 should be submitted in a single
document for a combined total of at least two pages in length. Use headings and
subheadings specify parts 1 and 2 and as necessary. You are required to cite
and reference at least your textbook. Use APA style guidelines. Title and
reference page do not count towards minimum page length requirement.