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 | 15.00% |
| Kulatsu Motors Co. (KMC) | $2,000 | 1.50 | 12.00% |
| Western Gas & Electric Co. (WGC) | $1,500 | 1.20 | 16.00% |
| Makissi Corp. (MC) | $3,000 | 0.50 | 22.50% |
Suppose all stocks in Ariels portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Andalusian Limited
Western Gas & Electric Co.
Kulatsu Motors Co.
Makissi Corp.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of standalone risk?
Kulatsu Motors Co.
Makissi Corp.
Western Gas & Electric Co.
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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Lords Of Finance The Bankers Who Broke The World
Authors: Liaquat Ahamed
1st Edition
0143116800, 978-0143116806
