Question
Cheyenne 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
Cheyenne 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 |
|---|---|---|---|
| Omni Consumer Products Co. (OCP) | $1,750 | 1.00 | 9.00% |
| Tobotics Inc. (TI) | $1,000 | 1.30 | 11.00% |
| Western Gas & Electric Co. (WGC) | $750 | 1.10 | 20.00% |
| Makissi Corp. (MC) | $1,500 | 0.30 | 19.50% |
Suppose all stocks in Cheyennes portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Western Gas & Electric Co.
Tobotics Inc.
Makissi Corp.
Omni Consumer Products Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Omni Consumer Products Co.
Makissi Corp.
Tobotics Inc.
Western Gas & Electric Co.
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 |
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The Charles Schwab Guide To Finances After Fifty
Authors: Carrie Schwab-Pomerantz, Joanne Cuthbertson
1st Edition
0804137366, 978-0804137362
