Question
Ariel holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed in the
Ariel holds a $7,500 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 |
|---|---|---|---|
| Omni Consumer Products Co. (OCP) | $2,625 | 0.90 | 15.00% |
| Kulatsu Motors Co. (KMC) | $1,500 | 1.70 | 12.00% |
| Western Gas & Electric Co. (WGC) | $1,125 | 1.20 | 18.00% |
| Makissi Corp. (MC) | $2,250 | 0.50 | 25.50% |
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.
Omni Consumer Products Co.
Makissi Corp.
Kulatsu Motors Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Western Gas & Electric Co.
Kulatsu Motors Co.
Omni Consumer Products Co.
Makissi Corp.
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariels portfolios beta and required return? Fill in the following table:
| Beta | Required Return | |
|---|---|---|
| Ariels portfolio |
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Finance For Nonprofit Board Members Linking Mission To Money
Authors: Allen J. Proctor
1st Edition
0970603940, 9780970603944
