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Stocks offer an expected rate of return of 10% with a standard deviation of 20% and gold offers an expected return of 5% with a standard deviation of 25%. In light of the apparent inferiority of gold to stocks with respect to both mean return and volatility, would anyone hold gold?

Respuesta :

Answer:

Yes

Explanation:

It is possible for an investor to be attracted to holding gold as a part of his portfolio despite that it appears stocks dominate gold.

An investor may elect to hold gold if there is a low correlation between stocks and gold. However, if the correlation between gold and stocks is high, gold will not be attractive and no investor will hold god.

Therefore, an investor will hold gold when there is a low correlation between stocks and gold.

Yes it should be hold.

The following information should be considered:

  • In the case when the holding gold that should become the part of the portfolio rather than appeared in the stock so it is possible for the investor.
  • The investor should elect to hold when there is the less correlation between stock and gold.
  • So, an investor should hold gold when there is less correlation between the stock and gold.  

Therefore we can conclude that it should be hold.

Learn more: brainly.com/question/6201432

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