Question
Cheyenne 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
Cheyenne 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 |
---|---|---|---|
Omni Consumer Products Co. (OCP) | $3,500 | 1.00 | 18.00% |
Tobotics Inc. (TI) | $2,000 | 1.50 | 11.50% |
Western Gas & Electric Co. (WGC) | $1,500 | 1.15 | 20.00% |
Makissi Corp. (MC) | $3,000 | 0.60 | 22.50% |
Suppose all stocks in Cheyennes portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Tobotics Inc.
Western Gas & Electric Co.
Omni Consumer Products Co.
Makissi Corp.
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.
Omni Consumer Products Co.
Makissi Corp.
Tobotics Inc.
If the risk-free rate is 7% and the market risk premium is 8.5%, what is Cheyennes portfolios beta and required return? Fill in the following table:
Beta | Required Return | |
---|---|---|
Cheyennes portfolio |
Betta answer options are 0.6717, 1.0025,1.5038,0.8521
Required return answers are 848.25, 15.52, 1210.56, 1784.80
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