Question
Ariel holds a $5,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed in the
Ariel holds a $5,000 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) | $1,750 | 0.90 | 18.00% |
| Tobotics Inc. (TI) | $1,000 | 1.30 | 11.00% |
| Water and Power Co. (WPC) | $750 | 1.10 | 18.00% |
| Flitcom Corp. (FC) | $1,500 | 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?
Water and Power Co.
Flitcom Corp.
Tobotics Inc.
Andalusian Limited
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Flitcom Corp.
Andalusian Limited
Water and Power Co.
Tobotics Inc.
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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Mergers And Acquisitions Integration Handbook
Authors: Scott C. Whitaker
1st Edition
111800437X, 978-1118004371
