Essay Question:

1.      How can a portfolio/financial manager use beta to manage a portfolio? (Give examples of different type of strategies)

a.       If you want a high risk portfolio you look at high betas names

b.      Low risk portfolios look at low betas

c.       If you want to mix them up combine them together to make them more manageable

2.      What is the difference between longing a stock versus shorting a stock?

a.       Short = selling a stock you don’t own

b.      Pros and cons of being long and being short a stock

                                                              i.      Short (con) = you have to pay dividends and unlimited loss

3.      Bonus Question – Explain difference b/w fundamental and technical analysis