Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Mainway Toys Co. Western Gas & Electric Co. Kulatsu Motors Co. Perpetualcold Refrigeration Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Perpetualcold Refrigeration Co. Western Gas & Electric Co. Kulatsu Motors Co. Mainway Toys Co. 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?

Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio? Mainway Toys Co. Western Gas & Electric Co. Kulatsu Motors Co. Perpetualcold Refrigeration Co. Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk? Perpetualcold Refrigeration Co. Western Gas & Electric Co. Kulatsu Motors Co. Mainway Toys Co. 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?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

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Question

Ariel 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
Perpetualcold Refrigeration Co. (PRC)	$2,625	0.80	15.00%
Kulatsu Motors Co. (KMC)	$1,500	1.90	11.50%
Western Gas & Electric Co. (WGC)	$1,125	1.15	16.00%
Mainway Toys Co. (MTC)	$2,250	0.50	28.50%

Suppose all stocks in Ariel’s portfolio were equally weighted. Which of these stocks would contribute the least market risk to the portfolio?

Mainway Toys Co.

Western Gas & Electric Co.

Kulatsu Motors Co.

Perpetualcold Refrigeration Co.

Suppose all stocks in the portfolio were equally weighted. Which of these stocks would have the least amount of stand-alone risk?

Perpetualcold Refrigeration Co.

Western Gas & Electric Co.

Kulatsu Motors Co.

Mainway Toys Co.

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

Beta: 0.9825, 0.8351, 1.4738, 0.6583

Required Return: 9.40%, 557.00%, 733.20%,1,343.00%

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