1. A stock had the following annual returns: 2.38% , 17.52% , 22.78% , and -2.81%. Compute the following for the stock:

a) Expected Return :

b) Variance :

c) Standard Deviation :

2.

A stock has an expected return of 5.47% and a standard deviation of 15.68%. Compute the following for this stock:

a) Upper range of 68% confindence interval :

b) Lower range of 68% confindence interval :

e) Upper range of 95% confindence interval :

d) Lower range of 95% confindence interval :

e) Upper range of 99% confindence interval :

f) Lower range of 99% confindence interval :

3.

There is a 23.47% probability of a below-average economy and a 76.53% probability of an average economy. If there is a below-average economy, Stocks A and B will have returns of -0.14% and -3.01% , respectively. If there is an average economy, Stocks A and B will have returns of 16.50% and 6.41%, respectively. Compute the following for Stocks A and B:

a) Stock A Expected Return :

b) Stock B Expected Return :

c) Stock A Standard Deviation :

d) Stock B Standard Deviation :

4.

There is a 28.21% probability of an average economy and a 71.79% probability of an above average economy. You invest 46.10% of your money in Stock S and 53.90% of your money in Stock T. In an average economy the expected returns for Stock S and Stock T are 14.37% and 14.88% , respectively. In an above average economy the the expected returns for Stock S and T are 28.58% and 21.80% , respectively. What is the expected return for this two stock portfolio?

5.

You are invested 31.75% in growth stocks with a beta of 1.662 , 12.73% in value stocks with a beta of 0.941 , and 55.52% in the market portfolio. What is the beta of your portfolio?

6.

An analyst gathered the following information for a stock and market parameters: stock beta = 1.254 ; expected return on the Market = 12.06% ; expected return on T-bills = 4.45% ; current stock Price = $7.10 ; expected stock price in one year = $13.47 ; expected dividend payment next year = $1.90 . Calculate the required return and expected return for this stock.

a) Required Return :

b) Expected Return :

7.

The market risk premium for next period is 9.17% and the risk-free rate is 2.72% . Stock Z has a beta of 1.359 and an expected return of 14.32%. Compute the following:

a) Market's reward-to-risk ratio :

b) Stock Z's reward-to-risk ratio :

9.

The market risk premium for next period is 8.20% and the risk-free rate is 3.30%. Stock Z has a beta of 0.963 and an expected return of 9.20%. What is the:

a) Market's reward-to-risk ratio?

b) Stock Z's reward-to-risk ratio (1 point):

8.

An analyst gathered the following information for a stock and market parameters: stock beta = 1.170; expected return on the Market = 13.00%; expected return on T-bills = 4.10%; current stock Price = $7.86; expected stock price in one year = $12.39; expected dividend payment next year = $2.49. Calculate the

a) Required return for this stock:

b) Expected return for this stock:

9.

The market risk premium for next period is 8.20% and the risk-free rate is 3.30%. Stock Z has a beta of 0.963 and an expected return of 9.20%. What is the:

a) Market's reward-to-risk ratio?

b) Stock Z's reward-to-risk ratio?

10.

You are invested 23.10% in growth stocks with a beta of 1.624, 16.90% in value stocks with a beta of 1.139, and 60.00% in the market portfolio. What is the beta of your portfolio?