Question
Ariel holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed in the
Ariel holds a $10,000 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) | $3,500 | 0.80 | 18.00% |
| Zaxatti Enterprises (ZE) | $2,000 | 1.30 | 12.00% |
| Western Gas & Electric Co. (WGC) | $1,500 | 1.20 | 16.00% |
| Makissi Corp. (MC) | $3,000 | 0.60 | 19.50% |
Suppose all stocks in Ariels portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Andalusian Limited
Zaxatti Enterprises
Makissi Corp.
Western Gas & Electric Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of standalone risk?
Makissi Corp.
Western Gas & Electric Co.
Zaxatti Enterprises
Andalusian Limited
If the risk-free rate is 4% and the market risk premium is 6%, what is Ariels portfolios beta and required return? Fill in the following table:
|
| Beta | Required Return |
|---|---|---|
| Ariels portfolio |
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Victorian Literature And Finance
Authors: Francis O'Gorman
1st Edition
0199281920, 978-0199281923
