Question
Emma holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks beta, is listed in the
Emma holds a $10,000 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 |
|---|---|---|---|
| Omni Consumer Products Co. (OCP) | $3,500 | 1.00 | 9.00% |
| Tobotics Inc. (TI) | $2,000 | 1.30 | 11.50% |
| Western Gas & Electric Co. (WGC) | $1,500 | 1.15 | 20.00% |
| Flitcom Corp. (FC) | $3,000 | 0.30 | 19.50% |
Suppose all stocks in Emmas portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Tobotics Inc.
Omni Consumer Products Co.
Western Gas & Electric Co.
Flitcom Corp.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of standalone risk?
Flitcom Corp.
Omni Consumer Products Co.
Western Gas & Electric Co.
Tobotics Inc.
If the risk-free rate is 4% and the market risk premium is 6%, what is Emmas portfolios beta and required return? Fill in the following table:
| Beta | Required Return | |
|---|---|---|
| Emmas portfolio |
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Finance Theory And Practice
Authors: Anne Marie Ward
4th Edition
191235036X, 978-1912350360
