Question
10. Portfolio risk and return Cheyenne holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks
10. Portfolio risk and return
Cheyenne holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed in the following table:
| Stock | Investment | Beta | Standard Deviation |
|---|---|---|---|
| Andalusian Limited (AL) | $2,625 | 0.90 | 9.00% |
| Kulatsu Motors Co. (KMC) | $1,500 | 1.90 | 11.00% |
| Three Waters Co. (TWC) | $1,125 | 1.10 | 18.00% |
| Mainway Toys Co. (MTC) | $2,250 | 0.30 | 28.50% |
Suppose all stocks in Cheyennes portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Kulatsu Motors Co.
Andalusian Limited
Mainway Toys Co.
Three Waters Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of standalone risk?
Three Waters Co.
Andalusian Limited
Kulatsu Motors Co.
Mainway Toys Co.
If the risk-fre
e rate is 4% and the market risk premium is 6%, what is Cheyennes portfolios beta and required return? Fill in the following table:
Calculate:
| Beta | Required Return | |
|---|---|---|
| Cheyennes portfolio |
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International Finance
Authors: Keith Pilbeam
5th Edition
1350347094, 978-1350347090
