Ch 08: Assignment - Risk and Rates of Return Elle nolas a $5,000 portrollo that consists or rOur stocKs. Her investment in eacn stock, as well as each stock's beta, is listed in the following table: Standard Deviation Stock Investment Beta Perpetualcold Refrigeration Co. (PRC) $1,750 0.90 12.00% Zaxatti Enterprises (ZE) 1.70 $1,000 11.00% Western Gas & Electric Co. (WGC) $750 1.10 18.00% Makissi Corp. (MC) $1,500 0.40 25.50% Suppose all stocks in the portfolio were equally weighted Suppose all stocks in Elle's portfolio were equally weighted. Which of these stocks would contribute the Which of these stocks would have the least amount of least market risk to the portfolio? standalone risk? Makissi Corp. Perpetualcold Refrigeration Co. Makissi Corp. Western Gas & Electric Co. Zaxatti Enterprises Zaxatti Enterprises Western Gas & Electric Co O Perpetualcold Refrigeration Co. If the risk-free rate is 7% and the market risk premium is 9%, what is Elle's portfolio's beta and required return? Fill in the following table: Required Return Beta Elle's portfolio O O O O

Question
Ch 08: Assignment - Risk and Rates of Return
Elle nolas a $5,000 portrollo that consists or rOur stocKs. Her investment in eacn stock, as well as each stock's beta,
is listed in the following table:
Standard Deviation
Stock
Investment
Beta
Perpetualcold Refrigeration Co. (PRC)
$1,750
0.90
12.00%
Zaxatti Enterprises (ZE)
1.70
$1,000
11.00%
Western Gas & Electric Co. (WGC)
$750
1.10
18.00%
Makissi Corp. (MC)
$1,500
0.40
25.50%
Suppose all stocks in the portfolio were equally weighted
Suppose all stocks in Elle's portfolio were equally
weighted. Which of these stocks would contribute the
Which of these stocks would have the least amount of
least market risk to the portfolio?
standalone risk?
Makissi Corp.
Perpetualcold Refrigeration Co.
Makissi Corp.
Western Gas & Electric Co.
Zaxatti Enterprises
Zaxatti Enterprises
Western Gas & Electric Co
O Perpetualcold Refrigeration Co.
If the risk-free rate is 7% and the market risk premium is 9%, what is Elle's portfolio's beta and required return? Fill
in the following table:
Required Return
Beta
Elle's portfolio
O O O O

Image Transcription

Ch 08: Assignment - Risk and Rates of Return Elle nolas a $5,000 portrollo that consists or rOur stocKs. Her investment in eacn stock, as well as each stock's beta, is listed in the following table: Standard Deviation Stock Investment Beta Perpetualcold Refrigeration Co. (PRC) $1,750 0.90 12.00% Zaxatti Enterprises (ZE) 1.70 $1,000 11.00% Western Gas & Electric Co. (WGC) $750 1.10 18.00% Makissi Corp. (MC) $1,500 0.40 25.50% Suppose all stocks in the portfolio were equally weighted Suppose all stocks in Elle's portfolio were equally weighted. Which of these stocks would contribute the Which of these stocks would have the least amount of least market risk to the portfolio? standalone risk? Makissi Corp. Perpetualcold Refrigeration Co. Makissi Corp. Western Gas & Electric Co. Zaxatti Enterprises Zaxatti Enterprises Western Gas & Electric Co O Perpetualcold Refrigeration Co. If the risk-free rate is 7% and the market risk premium is 9%, what is Elle's portfolio's beta and required return? Fill in the following table: Required Return Beta Elle's portfolio O O O O

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