Juanita 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 0.90 9.00% Tobotics Inc. (TI) $1,500 1.90 11.00% Three Waters Co. (TWC) $1,125 1.10 18.00% Flitcom Corp. (FC) $2,250 0.30 28.50%   Suppose all stocks in Juanita’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 ?  .   If the risk-free rate is 5.00% and the market risk premium is 7.50%, then Juanita’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
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Juanita 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 0.90 9.00%
Tobotics Inc. (TI) $1,500 1.90 11.00%
Three Waters Co. (TWC) $1,125 1.10 18.00%
Flitcom Corp. (FC) $2,250 0.30 28.50%
 
Suppose all stocks in Juanita’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 ?  .
 
If the risk-free rate is 5.00% and the market risk premium is 7.50%, then Juanita’s portfolio will exhibit a beta of   ?  and a required return of     ?.
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