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Author Question: You manage your own portfolio of about twenty stocks. One of which is Honda Motors. The returns on ... (Read 94 times)

mia

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on: Jul 10, 2018
You manage your own portfolio of about twenty stocks. One of which is Honda Motors. The returns on Honda tend to move up and down with the economy as a whole.
 
  You decide to sell Honda and replace it with the common stock of Repo-Man Inc, an asset recovery company. Repo-Man's shares tend to rise when the economy falls, and vice versa. Your portfolio's beta should:
  A) Decrease
  B) Increase
  C) Remain unchanged
  D) Either Increase or Decrease

Question 2

Is it possible for the cash budget and the pro forma income statement to have different results?
 
  A) no, because the cash budget and the pro forma income statement provide forecasts for the
  same time period
  B) yes, because revenues and expenses included in each statement are different
  C) yes, because revenues and expenses are accounted for over different time periods
  D) no, because they contain the same variables, while just using different formats
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
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InfiniteSteez

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Reply #1 on: Jul 10, 2018
Answer to Question 1

A

Answer to Question 2

C


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