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Financial Analytics: Mergers, Acquisitions, and Portfolio Management

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Financial Analytics: Mergers, Acquisitions, and Portfolio Management

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Questions and Answers

What is a key benefit of diversification in a portfolio?

Increased dependence on a single asset

Reduction in potential returns

Reduced risk through unsystematic risk reduction (correct)

Increased risk exposure

What is the primary objective of financial analytics in Mergers and Acquisitions?

To minimize tax liabilities

To reduce operational costs

To identify potential synergy and value creation (correct)

To optimize portfolio returns

What is the primary risk associated with investing in cryptocurrency?

Regulatory risk (correct)

Credit risk

Liquidity risk

Market risk

What is the formula to calculate the return of a single investment?

(Ending Value - Beginning Value) / Beginning Value Signup and view all the answers

What is the primary method to calculate portfolio returns?

Weighted average return of individual investments Signup and view all the answers

Which of the following scenarios is most likely to result in a decrease in portfolio risk?

A company engages in a diversifying merger Signup and view all the answers

What is the primary advantage of using financial analytics in Mergers and Acquisitions?

To assess the financial viability of a target company Signup and view all the answers

An investor holds a portfolio consisting of two stocks with a correlation coefficient of 0.7. If the return of one stock is 10%, what is the minimum return of the other stock required to reduce the portfolio's overall risk?

7% Signup and view all the answers

A cryptocurrency investor holds a portfolio with a beta of 1.5. If the market return is 8%, what is the expected return of the portfolio?

12% Signup and view all the answers

An investor diversifies their portfolio by allocating 60% to a domestic stock index and 40% to an international stock index. If the domestic stock index returns 6% and the international stock index returns 4%, what is the portfolio's return?

5.2% Signup and view all the answers