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1 . A stock is priced at $15.97 today, and analysts have a view that the stock will trade at $17.73 in one year. The

1. A stock is priced at $15.97 today, and analysts have a view that the stock will trade at $17.73 in one year. The current risk free rate in the economy is 5.00% while the market portfolio risk premium is 7.00%. If the stock is fairly priced, what is the implied beta for the stock?

2. An investor has $10,000 to invest in 5 different stocks. Information regarding the 5 stocks is shown in the table below:

Stock Expected Return Beta Amount Invested
A 9.00% 1.00 $1,623.00
B 10.00% 1.20 $2,794.00
C 6.50% 0.70 $2,882.00
D 8.00% 0.90 $927.00
E 12.00% 1.40 $1,774.00

Also, the risk free rate for the economy is currently 3.00%.

What is the beta for this portfolio?

3. An investor has $10,000 to invest in 5 different stocks. Information regarding the 5 stocks is shown in the table below:

Stock Expected Return Beta Amount Invested
A 9.00% 1.00 $1,623.00
B 10.00% 1.20 $2,794.00
C 6.50% 0.70 $2,882.00
D 8.00% 0.90 $927.00
E 12.00% 1.40 $1,774.00

Also, the risk free rate for the economy is currently 3.00%.

Given the above information, what is the market risk premium for investors (assuming the expected portfolio return is equal to the required portfolio return)?

4. An investor plans to invest funds in the following stocks:

Stock Beta Amount Invested
A 1.39 $1,939.00
B 1.21 $2,818.00
C 0.75 $1,378.00

The risk-free rate is currently 3.00%, while the market risk premium is 6.00%.

What is the beta of this portfolio?

5. An investor plans to invest funds in the following stocks:

Stock Beta Amount Invested
A 1.39 $1,939.00
B 1.21 $2,818.00
C 0.75 $1,378.00

The risk-free rate is currently 3.00%, while the market risk premium is 6.00%.

Given the above information, find the required return to hold this portfolio.

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