Question
Cheyenne 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
Cheyenne 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 |
---|---|---|---|
Omni Consumer Products Co. (OCP) | $2,625 | 0.90 | 18.00% |
Kulatsu Motors Co. (KMC) | $1,500 | 1.50 | 11.50% |
Western Gas & Electric Co. (WGC) | $1,125 | 1.15 | 18.00% |
Flitcom Corp. (FC) | $2,250Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? | 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?
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Cheyennes portfolios beta and required return? Fill in the following table:
Beta | Required Return | |
---|---|---|
Cheyennes portfolio |
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