1.

2.

3.Elle holds a $5,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed in the following table:

Returns earned over a given time period are called realized returns. Historical data on realized returns is often used to estimate future results. Analysts across companies use realized stock returns to estimate the risk of a stock. Consider the case of Happy Dog Soap Inc. (HDS): Five years of realized returns for HDS are given in the following table. Remember: 1. While HDS was started 40 years ago, its common stock has been publicly traded for the past 25 years. 2. The returns on its equity are calculated as arithmetic returns. 3. The historical returns for HDS for 2014 to 2018 are: 2014 2015 2016 2017 2018 Stock return 20.00% 13.60% 24.00% 33.60% 10.40% Given the preceding data, the average realized return on HDS's stock is of HDS's historical returns. Based on this conclusion, the standard deviation of HDS's The preceding data series represents historical returns is If investors expect the average realized return from 2014 to 2018 on HDS's stock to continue into the future, its coefficient of variation (CV) will be Suppose you are the money manager of a $5.06 million investment fund. The fund consists of four stocks with the following investments and betas: (0.50) Stock Investment Beta A $ 480,000 1.50 B 700,000 C 1,180,000 1.25 D 2,700,000 0.75 If the market's required rate of return is 13% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. Investment Beta Standard Deviation 15.00% $1,750 0.80 Stock Omni Consumer Products Co. (OCP) Kulatsu Motors Co. (KMC) Three Waters Co. (TWC) Flitcom Corp. (FC) $1,000 1.90 11.00% $750 1.10 16.00% $1,500 0.50 28.50% Suppose all stocks in Elle's portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Kulatsu Motors Co. Three Waters Co. Flitcom Corp. Omni Consumer Products Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Omni Consumer Products Co. Three Waters Co. Kulatsu Motors Co. Flitcom Corp. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Elle's portfolio's beta and required return? Fill in the following table: Beta Required Return Elle's portfolio