Darnell holds a $5,000 portfolio that consists of four stocks. His investment in each stock, as well as each stock's beta, is listed in the following table: Stock Omni Consumer Products Co. (OCP) Kulatsu Motors Co(KMC) Three Waters Co. (TWC) Makissi Corp. (MC) Investment $1,750 $1,000 $750 $1,500 Beta Standard Deviation 0.90 1.30 1.10 0.60 18.00% 11.00% 18.00% 19.50% Suppose all stocks in Darnell's 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 Omni Consumer Products Co. Makissi Corp. If the risk-free rate is 4.00% and the market risk premium is 6.50%, then Darnell's portfolio will exhibit a beta of and a required return of
Darnell holds a $5,000 portfolio that consists of four stocks. His investment in each stock, as well as each stock's beta, is listed in the following table: Stock Omni Consumer Products Co. (OCP) Kulatsu Motors Co(KMC) Three Waters Co. (TWC) Makissi Corp. (MC) Investment $1,750 $1,000 $750 $1,500 Beta Standard Deviation 0.90 1.30 1.10 0.60 18.00% 11.00% 18.00% 19.50% Suppose all stocks in Darnell's 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 Omni Consumer Products Co. Makissi Corp. If the risk-free rate is 4.00% and the market risk premium is 6.50%, then Darnell's portfolio will exhibit a beta of and a required return of
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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Transcribed Image Text:9. Conceptualquestions on portfolio and stand-alone risk
Darnell holds a $5,000 portfolio that consists of four stocks. His investment in each stock, as well as each stock's beta, is listed in the following table:
Stock
Omni Consumer Products Co. (OCP)
Kulatsu Motors Co(KMC)
Three Waters Co. (TWC)
Makissi Corp. (MC)
Investment
$1,750
$1,000
$750
$1,500
Beta Standard Deviation
0.90
1.30
1.10
0.60
18.00%
11.00%
18.00%
19.50%
Suppose all stocks in Darnell's portfolio were equally weighted. The stock that would contribute the least systematic risk to the portfolio is
Makissi Corp.
Further, if all of the stocks in the portfolio were equally weighted, the stock that would have the least amount
of unsystematic risk is Omni Consumer Products Co.
If the risk-free rate is 4.00% and the market risk premium is 6.50%, then Darnell's portfolio will exhibit a beta of
and a required return of
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