Ariel holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stock’s beta, is listed in the following table: Stock Investment Beta Standard Deviation Perpetualcold Refrigeration Co. (PRC) $2,625 0.80 15.00% Kulatsu Motors Co. (KMC) $1,500 1.90 11.50% Western Gas & Electric Co. (WGC) $1,125 1.15 16.00% Mainway Toys Co. (MTC) $2,250 0.50 28.50% Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Mainway Toys Co. Western Gas & Electric Co. Kulatsu Motors Co. Perpetualcold Refrigeration Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Perpetualcold Refrigeration Co. Western Gas & Electric Co. Kulatsu Motors Co. Mainway Toys Co. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel’s portfolio’s beta and required return? Fill in the following table: Beta Required Return Ariel’s portfolio Beta options: 0.9825, 0.8351, 1.4738, 0.6583 Required return: 9.40, 557.00, 733.20, 1,343.00
Ariel holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stock’s beta, is listed in the following table: Stock Investment Beta Standard Deviation Perpetualcold Refrigeration Co. (PRC) $2,625 0.80 15.00% Kulatsu Motors Co. (KMC) $1,500 1.90 11.50% Western Gas & Electric Co. (WGC) $1,125 1.15 16.00% Mainway Toys Co. (MTC) $2,250 0.50 28.50% Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Mainway Toys Co. Western Gas & Electric Co. Kulatsu Motors Co. Perpetualcold Refrigeration Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Perpetualcold Refrigeration Co. Western Gas & Electric Co. Kulatsu Motors Co. Mainway Toys Co. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel’s portfolio’s beta and required return? Fill in the following table: Beta Required Return Ariel’s portfolio Beta options: 0.9825, 0.8351, 1.4738, 0.6583 Required return: 9.40, 557.00, 733.20, 1,343.00
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Ariel holds a $7,500 portfolio that consists of four stocks. Her investment in each stock, as well as each stock’s beta, is listed in the following table:
Stock
|
Investment
|
Beta
|
Standard Deviation
|
---|---|---|---|
Perpetualcold Refrigeration Co. (PRC) | $2,625 | 0.80 | 15.00% |
Kulatsu Motors Co. (KMC) | $1,500 | 1.90 | 11.50% |
Western Gas & Electric Co. (WGC) | $1,125 | 1.15 | 16.00% |
Mainway Toys Co. (MTC) | $2,250 | 0.50 | 28.50% |
Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
- Mainway Toys Co.
- Western Gas & Electric Co.
- Kulatsu Motors Co.
- Perpetualcold Refrigeration Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
- Perpetualcold Refrigeration Co.
- Western Gas & Electric Co.
-
Kulatsu Motors Co.
- Mainway Toys Co.
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel’s portfolio’s beta and required return? Fill in the following table:
|
Beta
|
Required Return
|
---|---|---|
Ariel’s portfolio |
Beta options: 0.9825, 0.8351, 1.4738, 0.6583
Required return: 9.40, 557.00, 733.20, 1,343.00
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