Chapter #11 Mastery Problems 1) Explain the difference between systematic and unsystematic risk? Which portfolio has the least unsystematic risk and why? a-500 Energy Stocks a- 500 Energy Stocks b-50 Stocks (5 each from ten different sectors) c-500 Gold Bars ( Like the ones they steal in Die Hard with a Vengeance) 2) Ichabod Corporations' common stock has a beta of 1.2. The risk free rate is 4% and the expected return on the market is 9%. Using the Capital Asset Pricing Model find the stock's expected return.3) You own a stock portfolio that invests in 4 stocks with the following weights and betas. Using the data in the table below what is the portfolio beta? Stock Weight Beta Q 0.25 1.15 R 0.15 0.86 0.40 1.05 0.20 0.95 4) Using the data in the table below, calculate the expected return of the portfolio? Expected Stock Price # of Shares Return W $25 400 14% $35 250 15% $12 600 20% $52 125 8%