Diversified Risk Stock Portfolio

by | Mar 14, 2023 | agriculture

 

 

Create a portfolio of five to eight stocks that demonstrate diversified risk. List the stocks along with their current price and previous 1-year and 5-year rates of return. Below the list of stocks, address the issues described below.
 Explain the difference between portfolio risk and stand-alone risk.
 Briefly explain why you selected each stock and how this investment portfolio would have less risk than selecting just one stock.
 How does risk aversion affect a stock’s required rate of return?
 Explain the distinction between a stock’s price and its intrinsic value.

Sample solution

Dante Alighieri played a critical role in the literature world through his poem Divine Comedy that was written in the 14th century. The poem contains Inferno, Purgatorio, and Paradiso. The Inferno is a description of the nine circles of torment that are found on the earth. It depicts the realms of the people that have gone against the spiritual values and who, instead, have chosen bestial appetite, violence, or fraud and malice. The nine circles of hell are limbo, lust, gluttony, greed and wrath. Others are heresy, violence, fraud, and treachery. The purpose of this paper is to examine the Dante’s Inferno in the perspective of its portrayal of God’s image and the justification of hell. 

In this epic poem, God is portrayed as a super being guilty of multiple weaknesses including being egotistic, unjust, and hypocritical. Dante, in this poem, depicts God as being more human than divine by challenging God’s omnipotence. Additionally, the manner in which Dante describes Hell is in full contradiction to the morals of God as written in the Bible. When god arranges Hell to flatter Himself, He commits egotism, a sin that is common among human beings (Cheney, 2016). The weakness is depicted in Limbo and on the Gate of Hell where, for instance, God sends those who do not worship Him to Hell. This implies that failure to worship Him is a sin.


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God is also depicted as lacking justice in His actions thus removing the godly image. The injustice is portrayed by the manner in which the sodomites and opportunists are treated. The opportunists are subjected to banner chasing in their lives after death followed by being stung by insects and maggots. They are known to having done neither good nor bad during their lifetimes and, therefore, justice could have demanded that they be granted a neutral punishment having lived a neutral life. The sodomites are also punished unfairly by God when Brunetto Lattini is condemned to hell despite being a good leader (Babor, T. F., McGovern, T., & Robaina, K. (2017). While he commited sodomy, God chooses to ignore all the other good deeds that Brunetto did.

Finally, God is also portrayed as being hypocritical in His actions, a sin that further diminishes His godliness and makes Him more human. A case in point is when God condemns the sin of egotism and goes ahead to commit it repeatedly. Proverbs 29:23 states that “arrogance will bring your downfall, but if you are humble, you will be respected.” When Slattery condemns Dante’s human state as being weak, doubtful, and limited, he is proving God’s hypocrisy because He is also human (Verdicchio, 2015). The actions of God in Hell as portrayed by Dante are inconsistent with the Biblical literature. Both Dante and God are prone to making mistakes, something common among human beings thus making God more human.

To wrap it up, Dante portrays God is more human since He commits the same sins that humans commit: egotism, hypocrisy, and injustice. Hell is justified as being a destination for victims of the mistakes committed by God. The Hell is presented as being a totally different place as compared to what is written about it in the Bible. As a result, reading through the text gives an image of God who is prone to the very mistakes common to humans thus ripping Him off His lofty status of divine and, instead, making Him a mere human. Whether or not Dante did it intentionally is subject to debate but one thing is clear in the poem: the misconstrued notion of God is revealed to future generations.

 

References

Babor, T. F., McGovern, T., & Robaina, K. (2017). Dante’s inferno: Seven deadly sins in scientific publishing and how to avoid them. Addiction Science: A Guide for the Perplexed, 267.

Cheney, L. D. G. (2016). Illustrations for Dante’s Inferno: A Comparative Study of Sandro Botticelli, Giovanni Stradano, and Federico Zuccaro. Cultural and Religious Studies, 4(8), 487.

Verdicchio, M. (2015). Irony and Desire in Dante’s” Inferno” 27. Italica, 285-297.

Sample Solution

The portfolio of stocks I selected are:
• Apple Inc. (AAPL): Current Price: $117.60, 1-Year Return: 42.7%, 5-Year Return: 153.3%
• Microsoft Corporation (MSFT): Current Price: $187.66, 1-Year Return: 23.3%, 5-Year Return: 63%
• AT&T Inc. (T): Current Price: 29.25, 1-year return -1.6%, 5 year return 4%
• JP Morgan Chase & Co.(JPM): Current Price 98.66, 1 Year return 10%, 5 Year return 73%
• Johnson & Johnson (JNJ): Current Price 146.43, 1 Year Return 27%, 5 Year Return 69%.

Sample Solution

The portfolio of stocks I selected are:
• Apple Inc. (AAPL): Current Price: $117.60, 1-Year Return: 42.7%, 5-Year Return: 153.3%
• Microsoft Corporation (MSFT): Current Price: $187.66, 1-Year Return: 23.3%, 5-Year Return: 63%
• AT&T Inc. (T): Current Price: 29.25, 1-year return -1.6%, 5 year return 4%
• JP Morgan Chase & Co.(JPM): Current Price 98.66, 1 Year return 10%, 5 Year return 73%
• Johnson & Johnson (JNJ): Current Price 146.43, 1 Year Return 27%, 5 Year Return 69%.

Portfolio risk refers to the risk of an entire portfolio as opposed to stand alone risk which is the risk associated with a single stock or other security within a portfolio or investment strategy based on historical market performance and probability analysis over a given time period such as one year or five years in this case .Portfolio risk considers the volatility of each individual stock within the portfolio relative to overall market movements and combines them into a collective measurement – diversification reduces that overall level of volatility by spreading out investments across multiple securities in different sectors and industries with varying levels of correlation so that if one sector suffers losses due to macroeconomic factors then those losses can be absorbed by higher gains in another sector since they won’t all move together in lockstep . Therefore when selecting my stock picks for this portfolio I attempted to spread out my investments across different sectors including technology , telecommunications , banking , healthcare/pharmaceuticals and consumer goods/services so that any potential losses from one area can be offset by gains elsewhere for less overall risk than investing solely in one sector or company . Additionally each stock was chosen based on their current price as well as their past year and five year rates of returns which were high enough indicating reliable long term growth potential .
Risk aversion affects a stock’s required rate of return because investors prefer lower volatility when it comes to picking stocks in order to minimize their chances at suffering big losses due to market fluctuations while still taking advantage of moderate upside potential so they look for stocks with steady track records and consistent dividends along with reasonable prices before investing even if that means foregoing higher returns offered by other more volatile stocks since no investor wants to take on unnecessary risks without corresponding rewards especially when it comes down protecting their finances over the long run thus companies offering relatively low but stable returns will have higher demand since they appeal more favorably among conservative investors who prioritize consistency over rapid growth ; thereby raising their share prices without drastic price swings resulting in higher required rates of returns thanks largely to increased demand generated by these types savvy investors .
The distinction between a stock’s price and its intrinsic value lies primarily in how each figure is determined ; whereas an intrinsic value is determined through fundamental analysis such as cash flow statements net income calculations dividend yield etc.. A stock’s price however reflects what someone else has established its worth is whether through speculation or supply/demand related dynamics usually arising from news events short selling bearish forecasts media attention etc… As such there is often much variability between what an individual thinks something should cost versus how much others are willing pay for it resulting various discrepancy between actual trade activity prices set through fundamental variables inherent within the financial health organization issuing said security; making it important recognize this difference especially during times elevated sentiment surrounding certain equities might lead people overestimate some assets regardless underlying fundamentals actually driving performance

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