Solution-Determining the gilberto portfolio

Determining the gilberto portfolio

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Reference no: EM133205057

Gilberto holds a $10,000 portfolio that consists of four stocks. His investment in each stock, as well as each stock's beta, is listed in the following table:

Stock	Investment	Beta	Standard Deviation
Andalusian Limited (AL)	$3,500	1.00	12.00%
Kulatsu Motors Co. (KMC)	$2,000	1.30	11.00%
Three Waters Co. (TWC)	$1,500	1.10	20.00%
Mainway Toys Co. (MTC)	$3,000	0.40	19.50%

1. Suppose all stocks in Gilberto's portfolio were equally weighted. The stock that would contribute the least systematic risk to the portfolio is_____ .

2. Further, if all of the stocks in the portfolio were equally weighted, the stock that would have the least amount of unsystematic risk is_____ .

3. If the risk-free rate is 6.00% and the market risk premium is 8.50%, then Gilberto's portfolio will exhibit a beta of _____ and a required return of_____ .

Reference no: EM133205057

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Determining the gilberto portfolio

Reference no: EM133205057

Reference no: EM133205057

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