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i want the right answer to the question....
This question was answered on Apr 08, 2013. View the Answer
i want the right answer to the question. can u tell me how to do these question
question.docx

Question 1
According to the principle of diversification, the only way to lower the risk of a portfolio you must add
assets that are negatively correlated with your existing portfolio.
True.
False.

Question 2
Your own company has been very successful in producing and selling rocket engines. Given that
airplane engines are not that cheap, and the airline industry is extremely sensitive to the market, the
beta of your company is 2.50. The market risk premium (the average/expected difference between
the market return and the risk-free rate) is 4.00% and the return on a long-term government bond is
2.50%. You have discovered an exciting opportunity to create a new wireless device that will cover a
whole state in the U.S. with one station. This project will require a $4 billion investment, spread out
equally between now (t = 0) and the end of this year (t = 1), and will produce $500 million dollars in
perpetuity starting in year 2 (t = 2). Should you proceed with this project?
No.
Do not know.
Yes.

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8445544.xlsx

Question 1
According to the principle of diversification, the only way to lower the risk of a portfolio you must add assets that are negatively correlated with your existing portfolio.
True....

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