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Stock Investment Beta Standard Deviation Andalusian Limited (AL) $2,625 0.90 9.00% Kulatsu Motors Co. (KMC) $1,500 1.50 11.50% Water and Power Co. (WPC) $1,125 1.15

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Stock Investment Beta Standard Deviation Andalusian Limited (AL) $2,625 0.90 9.00% Kulatsu Motors Co. (KMC) $1,500 1.50 11.50% Water and Power Co. (WPC) $1,125 1.15 18.00% Mainway Toys Co. (MTC) $2,250 0.30 22.50% Suppose all stocks in Ariel's portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? O Water and Power Co. O Andalusian Limited Mainway Toys Co. Okulatsu Motors Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Water and Power Co. O Mainway Toys Co. Kulatsu Motors Co. O Andalusian Limited If the risk-free rate is 7% and the market risk premium is 8.5%, what is Ariel's portfolio's beta and required return? Fill in the following table: Beta Required Return Ariel's portfolio

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