Question
Emma 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
Emma 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 | 1.00 | 12.00% |
| Tobotics Inc. (TI) | $1,500 | 1.50 | 12.00% |
| Western Gas & Electric Co. (WGC) | $1,125 | 1.20 | 20.00% |
| Mainway Toys Co. (MTC) | $2,250 | 0.40 | 22.50% |
Suppose all stocks in Emmas portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Omni Consumer Products Co.
Western Gas & Electric Co.
Tobotics Inc.
Mainway Toys Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Western Gas & Electric Co.
Omni Consumer Products Co.
Tobotics Inc.
Mainway Toys Co.
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Emmas portfolios beta and required return? Fill in the following table:
| Beta | Required Return | |
|---|---|---|
| Emmas portfolio |
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Municipal Finances A Handbook For Local Governments
Authors: Catherine D. Farvacque-Vitkovic, Mihaly Kopanyi
1st Edition
