Interest rates, recession

Interest rates, recession

Interest rates, recession and wars all represent sources of systematic risk because they affect the entire market and cannot be avoided through diversification. Whereas this type of risk affects a broad range of securities, unsystematic risk affects a very specific group of securities or an individual security. Systematic risk can be mitigated only by being hedged.Even a portfolio of well-diversified assets cannot escape all risk.Go to a website that measures financial statistics for US companies. A typical one would be finance.yahoo.com.Locate the current “beta” for the following stocks:Winnebago IndustriesGoogleGeneral MotorsEvaluate the systematic and unsystematic risk for each of the shown measures of beta (?) listed for those stocks. List them in decreasing order of systematic risk – and a brief evaluation of your assessment of their value as an investment.Reflect on your answer for number one above. For your highest risk stock- note two other factors from Chapter 12 or 13 that would indicate whether the risk implied in the stock by the beta would be justified – for each, note, a) the factor you chose and b) why that factor is important.

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