Which of the following qualitatively describes how you would "unlever a stock" within your own portfolio? Borrow money to buy additional shares of stock on margin

Finance Aug 23, 2020

Which of the following qualitatively describes how you would "unlever a stock" within your own portfolio?

Borrow money to buy additional shares of stock on margin.

Borrow money to invest in a fixed-income security.

Sell off a portion of the shares you own and invest the proceeds in a different stock to diversify.

Sell off a portion of the shares you own and invest the proceeds in a fixed-income security.

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Expert Solution

Selling the stock from the portfolio and investing it in fixed income securities like t bills ,bonds helps in unlevering the stock. The correct option is 4th "Sell off a portion of the shares you own and invest the proceeds in a fixed-income security".

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