Cheyenne 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 Omni Consumer Products Co. (OCP) $2,625 1.00 9.00% Kulatsu Motors Co. (KMC) $1,500 1.70 11.50% Three Waters Co. (TWC) $1,125 1.15 20.00% Mainway Toys Co. (MTC) $2,250 0.30 25.50%   Suppose all stocks in Cheyenne’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Three Waters Co.   Omni Consumer Products Co.   Kulatsu Motors Co.   Mainway Toys Co.     Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Mainway Toys Co.   Three Waters Co.   Kulatsu Motors Co.   Omni Consumer Products Co.     If the risk-free rate is 7% and the market risk premium is 8.5%, what is Cheyenne’s portfolio’s beta and required return? Fill in the following table:   Beta Required Return Cheyenne’s portfolio

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
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Cheyenne 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
Omni Consumer Products Co. (OCP) $2,625 1.00 9.00%
Kulatsu Motors Co. (KMC) $1,500 1.70 11.50%
Three Waters Co. (TWC) $1,125 1.15 20.00%
Mainway Toys Co. (MTC) $2,250 0.30 25.50%
 
Suppose all stocks in Cheyenne’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Three Waters Co.
 
Omni Consumer Products Co.
 
Kulatsu Motors Co.
 
Mainway Toys Co.
 
 
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Mainway Toys Co.
 
Three Waters Co.
 
Kulatsu Motors Co.
 
Omni Consumer Products Co.
 
 
If the risk-free rate is 7% and the market risk premium is 8.5%, what is Cheyenne’s portfolio’s beta and required return? Fill in the following table:
 
Beta
Required Return
Cheyenne’s portfolio          
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