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Determining the gilberto portfolio

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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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