1. A stock paying an annual dividend of $10 indefinitely, the beta of the stock is 0.8, the expected return of the market portfolio is 15% and the risk free rate is 5%. If the actual stock price is $73, what should you do? Calculate and explain.

2.You are bearish on Zoom stock. You decide to short sale 50 shares for 1 year. Zoom's current share price is $100. Calculate your profit if at the end of the year Zoom's stock price goes down to $95 per share, the stock pays a dividend of $6 per share and you paid $3.5 per share in commissions for each transaction.

3. Assume your portfolio's initial asset allocation was 40% to bonds and 60% to stocks. You invested 100,000$. After 3 years, stocks went up by 60% and the bonds by 20%. Calculate and explain how to rebalance your portfolio.

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4.Assume CAPM holds. The standard deviation of the market portfolio is 50% and the standard deviation of your portfolio is 68%, what will be the proportion of your investment in the risky asset? Explain what they mean.