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8. Portfolio risk and return Elle holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stock's
8. Portfolio risk and return Elle holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stock's beta, is listed in the following table: Stock Perpetualcold Refrigeration Co. (PRC) Zaxatti Enterprises (ZE) Water and Power Co. (WPC) Mainway Toys Co. (MTC) Investment Beta Standard Deviation $3,500 0.80 12.00% $2,000 1.90 11.00% $1,500 1.10 16.00% $3,000 0.40 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? Mainway Toys Co. Perpetualcold Refrigeration Co. o Zaxatti Enterprises . Water and Power Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Perpetualcold Refrigeration Co. Mainway Toys Co. . Water and Power Co. Zaxatti Enterprises 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
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