7 Problem 12-4 Specific versus Market Risk (LO1) 10 points Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each stock is given beside its plot. Skipped Required: a. Which stock is safest for a diversified investor? b. Which stock is safest for an undiversified investor who puts all her funds in one of these stocks? c. Consider a portfolio with equal investments in each stock. What would this portfolio's beta have been? d. Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolio's return? The standard deviation of the market portfolio's return is 20%. e. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk- free rate of interest is 4%. eBook Print Complete this question by entering your answers in the tabs below. References ho Reg A and B Reqc Reg D Req E Which stock is safest for a diversified investor and undiversified investor who puts all her funds in one of these stocks? a. Diversified investor b. Undiversified investor Reqc > Problem 12-4 Specific versus Market Risk (LO1) 10 Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each stock is given beside its plot. points Skipped Required: a. Which stock is safest for a diversified investor? b. Which stock is safest for an undiversified investor who puts all her funds in one of these stocks? c. Consider a portfolio with equal investments in each stock. What would this portfolio's beta have been? d. Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolio's return? The standard deviation of the market portfolio's return is 20%. e. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk- free rate of interest is 4%. eBook Print Complete this question by entering your answers in the tabs below. References Req A and B Rec Reg D Req E Consider a portfolio with equal investments in each stock. What would this portfolio's beta have been? (Do not round intermediate calculations. Round your answer to 2 decimal places. Beta 7. Problem 12-4 Specific versus Market Risk (LO1) 10 Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each stock is given beside its plot. points Skipped Required: a. Which stock is safest for a diversified investor? b. Which stock is safest for an undiversified investor who puts all her funds in one of these stocks? c. Consider a portfolio with equal investments in each stock. What would this portfolio's beta have been? d. Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolio's return? The standard deviation of the market portfolio's return is 20%. e. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk- free rate of interest is 4%. eBook Print Complete this question by entering your answers in the tabs below. References Req A and B Reg C Reg D Req E Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolio's return? The standard deviation of the market portfolio's return is 20%. (Do not round intermediate calculations. Round your beta answer to 2 decimal places. Enter your standard deviation answer as a percent rounded to 1 decimal place.) Show less Beta Standard deviation % 7 Problem 12-4 Specific versus Market Risk (L01) 10 points Figure 12.11 shows plots of monthly rates of return on three stocks versus the stock market index. The beta and standard deviation of each stock is given beside its plot. Skipped Required: a. Which stock is safest for a diversified investor? b. Which stock is safest for an undiversified investor who puts all her funds In one of these stocks? c. Consider a portfolio with equal investments in each stock. What would this portfolio's beta have been? d. Consider a well-diversified portfolio made up of stocks with the same beta as Intel. What are the beta and standard deviation of this portfolio's return? The standard deviation of the market portfolio's return is 20%. e. What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk- free rate of interest is 4%. eBook Print C Complete this question by entering your answers in the tabs below. References Reg A and B Reg C Reg D Reg E What is the expected rate of return on each stock? Use the capital asset pricing model with a market risk premium of 8%. The risk-free rate of interest is 4%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Expected Rate of Return % Marathon Intel % Walmart %