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 |
|---|---|---|---|
| Perpetualcold Refrigeration Co. (PRC) | $3,500 | 1.00 | 15.00% |
| Tobotics Inc. (TI) | $2,000 | 1.30 | 11.00% |
| Western Gas & Electric Co. (WGC) | $1,500 | 1.10 | 20.00% |
| Flitcom Corp. (FC) | $3,000 | 0.50 | 19.50% |
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.
Perpetualcold Refrigeration Co.
Tobotics Inc.
Flitcom Corp.
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.
Tobotics Inc.
Western Gas & Electric Co.
Flitcom Corp.
If the risk-free rate is 7% and the market risk premium is 8.5%, what is Ariels portfolios beta and required return? Fill in the following table:
| Beta | Required Return | |
|---|---|---|
| Ariels portfolio |
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Fixed Income Portfolio Analytics A Practical Guide To Implementing Monitoring And Understanding Fixed Income Portfolios
Authors: David Jamieson Bolder
1st Edition
3319126660,3319126679
