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Ariel holds a $5,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stock's beta, is listed in the
Ariel holds a $5,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stock's beta, is listed in the following table: Investment Beta Standard Deviation 15.00% 0.80 Stock Andalusian Limited (AL) Kulatsu Motors Co. (KMC) Three Waters Co. (TWC) Mainway Toys Co. (MTC) 1.30 11.00% $1,750 $1,000 $750 $1,500 1.10 16.00% 19.50% 0.50 Suppose all stocks in Ariel's portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Mainway Toys Co. Andalusian Limited Three Waters Co. Kulatsu Motors Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of standalone risk? Kulatsu Motors Co. Mainway Toys Co. Andalusian Limited Three Waters Co. If the risk-free rate is 7% and the market risk premium is 9%, what is Ariel's portfolio's beta and required return? Fill in the following table: Beta Required Return Ariel's portfolio 0.855 1.283 0.727 0.573 Beta Required Return Ariel's portfolio 14.70% 20.68% 8.71% 18.23%
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