Elle holds a $10,000 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) $3,500 0.80 9.00% Kulatsu Motors Co. (KMC) $2,000 1.90 11.00% Western Gas & Electric Co. (WGC) $1,500 1.10 16.00% Makissi Corp. (MC) $3,000 0.30 28.50% Suppose all stocks in Elle’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Kulatsu Motors Co. Omni Consumer Products Co. Western Gas & Electric Co. Makissi Corp. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Makissi Corp. Omni Consumer Products Co. Kulatsu Motors Co. Western Gas & Electric Co. If the risk-free rate is 7% and the market risk premium is 8.5%, what is Elle’s portfolio’s beta and required return? Fill in the following table: Beta Required Return Elle’s portfolio
Elle holds a $10,000 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) $3,500 0.80 9.00% Kulatsu Motors Co. (KMC) $2,000 1.90 11.00% Western Gas & Electric Co. (WGC) $1,500 1.10 16.00% Makissi Corp. (MC) $3,000 0.30 28.50% Suppose all stocks in Elle’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Kulatsu Motors Co. Omni Consumer Products Co. Western Gas & Electric Co. Makissi Corp. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Makissi Corp. Omni Consumer Products Co. Kulatsu Motors Co. Western Gas & Electric Co. If the risk-free rate is 7% and the market risk premium is 8.5%, what is Elle’s portfolio’s beta and required return? Fill in the following table: Beta Required Return Elle’s portfolio
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 66P
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Elle holds a $10,000 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) | $3,500 | 0.80 | 9.00% |
| Kulatsu Motors Co. (KMC) | $2,000 | 1.90 | 11.00% |
| Western Gas & Electric Co. (WGC) | $1,500 | 1.10 | 16.00% |
| Makissi Corp. (MC) | $3,000 | 0.30 | 28.50% |
Suppose all stocks in Elle’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
Kulatsu Motors Co.
Omni Consumer Products Co.
Western Gas & Electric Co.
Makissi Corp.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
Makissi Corp.
Omni Consumer Products Co.
Kulatsu Motors Co.
Western Gas & Electric Co.
If the risk-free rate is 7% and the market risk premium is 8.5%, what is Elle’s portfolio’s beta and required return? Fill in the following table:
|
|
Beta
|
Required Return
|
|---|---|---|
| Elle’s portfolio |
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