2-2 Scenario Analysis (Stock Options)

2-2 Scenario Analysis (Stock Options) - QSO-510 Professor A...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
QSO-510 Professor: A. Duhon 2-2 Scenario Analysis (Stock Options) The table below shows information about the performance of stocks A and B last year. Return Standard Deviation Stock A 15 % 8.3% Stock B 14% 2.1% 1. As a financial advisor, are there factors other than return and risk that should be considered in making this decision? As a financial advisor, in addition to understanding what the risks are and the returns associated with those risks, it is important to understand your client’s risk appetite and their financial outcomes / goals. Your client might be risk averse and as such, prefer lower returns from investing in more stable known risks. On the other hand, your client might be more risky and willing to take on the added risks for the potentially larger returns. Risk appetite is just as important as knowing what returns are associated with what investments. Secondly, as a financial advisor, you need to understand what your client’s financial outcomes / goals are. Some clients might be investing as a means of
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern