Question
7. Portfolio risk and return Ariel holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks
7. Portfolio risk and return
Ariel 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 |
---|---|---|---|
Perpetualcold Refrigeration Co. (PRC) | $2,625 | 0.90 | 18.00% |
Zaxatti Enterprises (ZE) | $1,500 | 1.70 | 11.00% |
Western Gas & Electric Co. (WGC) | $1,125 | 1.10 | 18.00% |
Flitcom Corp. (FC) | $2,250 | 0.60 | 25.50% |
Suppose all stocks in Ariels portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Western Gas & Electric Co.
Flitcom Corp.
Perpetualcold Refrigeration Co.
Zaxatti Enterprises
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Western Gas & Electric Co.
Flitcom Corp.
Perpetualcold Refrigeration Co.
Zaxatti Enterprises
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariels portfolios beta and required return? Fill in the following table:
Beta | Required Return | |
---|---|---|
Ariels portfolio |
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