FIGURE 1 2 . 1 1 Monthly rates of return for ( c ) Marathon Oil, (
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Question:
FIGURE Monthly rates
of return for c Marathon Oil,
b Intel, and c Walmart, plus the
morket portfolio.
FIGURE continuedRequired:
Which stock is safest for a diversified investor?
Which stock is safest for an undiversified investor who puts all her funds in one of these stocks?
Consider a portfolio with equal investments in each stock. What would this portfolios beta have been?
Consider a welldiversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolios return? The standard deviation of the market portfolios return is
What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of The riskfree rate of interest is
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