Question
Elle 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
Elle 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 |
|---|---|---|---|
| Perpetualcold Refrigeration Co. (PRC) | $1,750 | 0.80 | 15.00% |
| Zaxatti Enterprises (ZE) | $1,000 | 1.70 | 11.00% |
| Water and Power Co. (WPC) | $750 | 1.10 | 16.00% |
| Makissi Corp. (MC) | $1,500 | 0.50 | 25.50% |
Suppose all stocks in Elles portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Zaxatti Enterprises
Water and Power Co.
Perpetualcold Refrigeration 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?
Perpetualcold Refrigeration Co.
Water and Power Co.
Zaxatti Enterprises
Makissi Corp.
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Elles portfolios beta and required return? Fill in the following table:
| Beta | Required Return | |
|---|---|---|
| Elles portfolio |
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The Meaningful Money Handbook
Authors: Pete Matthew
1st Edition
0857196510, 978-0857196514
