Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Multinational Finance

Authors: Kirt Butler

2nd Edition

0324004508, 978-0324004502

More Books

Students also viewed these Finance questions

Question

Identify five strategies to prevent workplace bullying.

Answered: 1 week ago