1.

An analyst gathered the following information for a stock and market parameters: stock beta = 1.20; expected return on the Market = 9.80%; expected return on T-bills = 4.20%; current stock Price = $5.19; expected stock price in one year = $11.90; expected dividend payment next year = $1.23. Calculate the a) Required return for this stock:

b) Expected return for this stock:

2.

The market risk premium for next period is 9.10% and the risk-free rate is 2.30%. Stock Z has a beta of 1.20 and an expected return of 11.70%. What is the: a) Market's reward-to-risk ratio?

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