Can someone please assist me with the following discussion question?

Can someone please assist me with the following discussion question?:

Class,

By our initial conversations, I simply assume that all of you have are familiar with or in some way experienced the financial meltdown of 2008-2009, especially in the housing sector. What the likely scenario for most of you is lower valuations of your property, or lower portfolio investment value, with some recovery in the last few years. However, you are still lucky. The financial companies issuing mortgages for inflated house prices or underwriting debt backed by worthless mortgages are still paying a big price for such failures.

That takes us to the second week’s discussion topic, which relates to the subject of risk and diversification. In chapter 6, you start reading about portfolio composition and the importance of putting together a diversified portfolio, risk aversion, risk diversification, etc. However, the book also states that simply putting together stocks with high correlation, regardless of number of stocks, will not achieve desired diversification, because you would still be exposed to similar industry risk, despite owning companies that are not similar at all.

The question is, is this assumption correct when it comes to creating a portfolio with companies in the same industry, such as the financial industry? Can you put together a portfolio of diverse financial companies, such as Wells Fargo (WFC), Citi (C), JP Morgan Chase (JPM) and Bank of America (BAC) all in the same industry, yet so different in what they do, and be confident that you have achieved diversification in your portfolio?

You might just dismiss it by saying they are all banks and all banks have suffered and someone with a portfolio consisting of just financial companies would not be even slightly diversified; however, I would like to point to the contrasting paths of now defunct Bear Sterns, Washington Mutual and the definitely much more prosperous Chase and Wells Fargo, same industry but no exact correlation in their performance.

Start by looking at the development of the stock prices for Wells Fargo, Citi, Chase and Bank of America. How have they performed in the past, and most recent years? How have they performed compared against each other? Again, the question is, can you achieve a diversified portfolio by holding companies in the same industry, the financial industry? Your book at different chapters says mostly no, but feel free to argue against that.

Running head: RISK DIVERSIFICATION RISK DIVERSIFICATIONSTUDENT NAMESCHOOL AFFILIATIONDATE RISK DIVERSIFICATION 2 Risk diversificationStock pricesCompany Stock prices asat august 1stWells…

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more