Suppose all stocks in Ariel's portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? O Flitcom Corp. Three Waters Co. Andalusian Limited O Zaxatti Enterprises Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? O Zaxatti Enterprises Three Waters Co. Andalusian Limited Flitcom Corp. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel's portfolio's beta and required return? Fill in the following table:
Suppose all stocks in Ariel's portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? O Flitcom Corp. Three Waters Co. Andalusian Limited O Zaxatti Enterprises Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? O Zaxatti Enterprises Three Waters Co. Andalusian Limited Flitcom Corp. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel's portfolio's beta and required return? Fill in the following table:
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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![**8. Portfolio Risk and Return**
Ariel holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stock's beta and standard deviation, is listed in the following table:
| Stock | Investment | Beta | Standard Deviation |
|-----------------------|------------|------|--------------------|
| Andalusian Limited (AL) | $3,500 | 1.00 | 9.00% |
| Zaxatti Enterprises (ZE) | $2,000 | 1.30 | 12.00% |
| Three Waters Co. (TWC) | $1,500 | 1.20 | 20.00% |
| Filtcom Corp. (FC) | $3,000 | 0.30 | 19.50% |
**Questions:**
1. Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
- Filtcom Corp.
- Three Waters Co.
- Andalusian Limited
- Zaxatti Enterprises
2. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
- Zaxatti Enterprises
- Three Waters Co.
- Andalusian Limited
- Filtcom Corp.
**Calculation:**
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel’s portfolio’s beta and required return? Fill in the following table:
| | Beta | Required Return |
|-----------------|-----------|-----------------|
| Ariel’s portfolio | [Dropdown] | [Dropdown] |](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6795bcee-481e-4cd9-9402-1dd9d1389a86%2Fdb457bab-b017-4dd6-a92d-7cef80f7f135%2Fma9jk4j_processed.png&w=3840&q=75)
Transcribed Image Text:**8. Portfolio Risk and Return**
Ariel holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stock's beta and standard deviation, is listed in the following table:
| Stock | Investment | Beta | Standard Deviation |
|-----------------------|------------|------|--------------------|
| Andalusian Limited (AL) | $3,500 | 1.00 | 9.00% |
| Zaxatti Enterprises (ZE) | $2,000 | 1.30 | 12.00% |
| Three Waters Co. (TWC) | $1,500 | 1.20 | 20.00% |
| Filtcom Corp. (FC) | $3,000 | 0.30 | 19.50% |
**Questions:**
1. Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
- Filtcom Corp.
- Three Waters Co.
- Andalusian Limited
- Zaxatti Enterprises
2. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
- Zaxatti Enterprises
- Three Waters Co.
- Andalusian Limited
- Filtcom Corp.
**Calculation:**
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Ariel’s portfolio’s beta and required return? Fill in the following table:
| | Beta | Required Return |
|-----------------|-----------|-----------------|
| Ariel’s portfolio | [Dropdown] | [Dropdown] |
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