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 |
|---|---|---|---|
| Andalusian Limited (AL) | $1,750 | 0.90 | 12.00% |
| Tobotics Inc. (TI) | $1,000 | 1.70 | 11.00% |
| Western Gas & Electric Co. (WGC) | $750 | 1.10 | 18.00% |
| Flitcom Corp. (FC) | $1,500 | 0.40 | 25.50% |
Suppose all stocks in Cheyennes portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Flitcom Corp.
Western Gas & Electric Co.
Tobotics Inc.
Andalusian Limited
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of standalone risk?
Western Gas & Electric Co.
Tobotics Inc.
Flitcom Corp.
Andalusian Limited
If the risk-free rate is 7% and the market risk premium is 9%, what is Cheyennes portfolios beta and required return? Fill in the following table:
|
| Beta | Required Return |
|---|---|---|
| Cheyennes portfolio |
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
9th Canadian Edition, Volume 2
978-0470161012
