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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 18.00%
Tobotics Inc. (TI) $1,000 1.90 11.50%
Water and Power Co. (WPC) $750 1.15 16.00%
Makissi Corp. (MC) $1,500 0.60 28.50%

Suppose all stocks in Elles portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?

Perpetualcold Refrigeration Co.

Water and Power Co.

Makissi Corp.

Tobotics Inc.

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.

Makissi Corp.

Tobotics Inc.

Water and Power Co.

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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