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 |
|---|---|---|---|
| Andalusian Limited (AL) | $2,625 | 1.00 | 15.00% |
| Kulatsu Motors Co. (KMC) | $1,500 | 1.50 | 11.00% |
| Water and Power Co. (WPC) | $1,125 | 1.10 | 20.00% |
| Flitcom Corp. (FC) | $2,250 | 0.50 | 22.50% |
Suppose all stocks in Cheyennes portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Kulatsu Motors Co.
Water and Power Co.
Flitcom Corp.
Andalusian Limited
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Andalusian Limited
Kulatsu Motors Co.
Water and Power Co.
Flitcom Corp.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management For Public Health And Not For Profit Organization
Authors: Steven A. Finkler
3rd International Edition
0138152772, 9780138152772
