Question
Janet 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
Janet 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 |
|---|---|---|---|
| Andalusian Limited (AL) | $3,500 | 1.00 | 12.00% |
| Zaxatti Enterprises (ZE) | $2,000 | 1.30 | 11.00% |
| Three Waters Co. (TWC) | $1,500 | 1.10 | 20.00% |
| Makissi Corp. (MC) | $3,000 | 0.40 | 19.50% |
Suppose all stocks in Janets portfolio were equally weighted. The stock that would contribute the least systematic risk to the portfolio is . Further, if all of the stocks in the portfolio were equally weighted, the stock that would have the least amount of unsystematic risk is .
If the risk-free rate is 6.00% and the market risk premium is 8.50%, then Janets portfolio will exhibit a beta of and a required return of
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Financial Sorcery Magical Strategies To Create Real And Lasting Wealth
Authors: Jason Miller
1st Edition
1601632185, 9781601632180
