8. Portfolio risk and return Emma 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 1.00 15.00% Kulatsu Motors Co. (KMC) $2,000 1.30 11.00% Three Waters Co. (TWC) $1,500 1.10 20.00% Flitcom Corp. (FC) $3,000 0.50 19.50% Suppose all stocks in Emma’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? a. Omni Consumer Products Co. b. Flitcom Corp. c. Three Waters Co. d. Kulatsu Motors Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? a. Flitcom Corp. b. Three Waters Co. c. Kulatsu Motors Co. d. Omni Consumer Products Co. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Emma’s portfolio’s beta and required return? Fill in the following table: Beta Required Return Emma’s portfolio _______? ___________?
8. Portfolio risk and return Emma 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 1.00 15.00% Kulatsu Motors Co. (KMC) $2,000 1.30 11.00% Three Waters Co. (TWC) $1,500 1.10 20.00% Flitcom Corp. (FC) $3,000 0.50 19.50% Suppose all stocks in Emma’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? a. Omni Consumer Products Co. b. Flitcom Corp. c. Three Waters Co. d. Kulatsu Motors Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? a. Flitcom Corp. b. Three Waters Co. c. Kulatsu Motors Co. d. Omni Consumer Products Co. If the risk-free rate is 4% and the market risk premium is 5.5%, what is Emma’s portfolio’s beta and required return? Fill in the following table: Beta Required Return Emma’s portfolio _______? ___________?
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 18PROB
Related questions
Question
8. Portfolio risk and return
Emma 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 | 1.00 | 15.00% |
| Kulatsu Motors Co. (KMC) | $2,000 | 1.30 | 11.00% |
| Three Waters Co. (TWC) | $1,500 | 1.10 | 20.00% |
| Flitcom Corp. (FC) | $3,000 | 0.50 | 19.50% |
Suppose all stocks in Emma’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?
a. Omni Consumer Products Co.
b. Flitcom Corp.
c. Three Waters Co.
d. Kulatsu Motors Co.
Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?
a. Flitcom Corp.
b. Three Waters Co.
c. Kulatsu Motors Co.
d. Omni Consumer Products Co.
If the risk-free rate is 4% and the market risk premium is 5.5%, what is Emma’s portfolio’s beta and required return? Fill in the following table:
|
|
Beta
|
Required Return
|
|---|---|---|
| Emma’s portfolio | _______? | ___________? |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you