# 8. Portfolio Risk and ReturnCheyenne 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 ||----------------------|------------|------|--------------------|| Andalusian Limited (AL) | $2,625 | 0.90 | 18.00% || Tobotics Inc. (TI) | $1,500 | 1.70 | 12.00% || Three Waters Co. (TWC) | $1,125 | 1.20 | 18.00% || Makissi Corp. (MC) | $2,250 | 0.60 | 25.50% |### Question 1:**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.- [ ] Tobotics Inc.- [ ] Andalusian Limited- [ ] Makissi Corp.### Question 2:**Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?**- [ ] Three Waters Co.- [ ] Makissi Corp.- [ ] Tobotics Inc.- [ ] Andalusian Limited### Risk-Free Rate and Market Risk: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 | | |Note: A dropdown is suggested for selecting the Beta and Required Return values.This exercise helps in understanding the concepts of portfolio risk, market risk, beta, and required return on investments.

a. Makissi Corp would have the least amount of market risk since it has the lowest beta b. Tobotics…

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 Andalusian Limited (AL) $2,625 0.90 18.00% Tobotics Inc. (TI) $1,500 1.70 12.00% Three Waters Co. (TWC) $1,125 1.20 18.00% Makissi Corp. (MC) $2,250 0.60 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. O Tobotics Inc. Andalusian Limited Makissi Corp. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone nisk? Three Waters Co. O Makissi Corp. O Tobotics Inc. O Andalusian Limited If the risk-free rate is 7% and the market risk premium is 8.5%, what is Cheyenne's portfolo's beta and required return? Fill in the following table Beta Required Return Cheyenne's portfolio

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 Andalusian Limited (AL) $2,625 0.90 18.00% Tobotics Inc. (TI) $1,500 1.70 12.00% Three Waters Co. (TWC) $1,125 1.20 18.00% Makissi Corp. (MC) $2,250 0.60 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. O Tobotics Inc. Andalusian Limited Makissi Corp. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone nisk? Three Waters Co. O Makissi Corp. O Tobotics Inc. O Andalusian Limited If the risk-free rate is 7% and the market risk premium is 8.5%, what is Cheyenne's portfolo'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

Section: Chapter Questions

Problem 1PS

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