Question
Ch8. 9. Janet holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed
Ch8. 9.
Janet 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 |
---|---|---|---|
Perpetualcold Refrigeration Co. (PRC) | $2,625 | 0.90 | 9.00% |
Tobotics Inc. (TI) | $1,500 | 1.70 | 11.00% |
Three Waters Co. (TWC) | $1,125 | 1.10 | 18.00% |
Mainway Toys Co. (MTC) | $2,250 | 0.30 | 25.50% |
Suppose all stocks in Janets portfolio were equally weighted. The stock that would contribute the least systematic risk to the portfolio is ________ . Further, if all of the stocks in the portfolio were equally weighted, the stock that would have the least amount of unsystematic risk is ________ .
If the risk-free rate is 4.00% and the market risk premium is 6.50%, then Janets portfolio will exhibit a beta of ____ and a required return of _________ .
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