1. Assume that the risk-free rate is 4% and the market risk premium is 5%. What is the expected return for the overall stock market? What is the required return on a stock that has a beta of 1.2 ? Market Return 1.0 Stock Return 1. 2 2. Calculate the required rate of retum for Parkside Industries. The stock's beta is 1.20, the rate on a T-bill in 4%, the rate on a long-term T-note is 6%, the expected return on the market is 11.5%, the market has averaged a 14% annual return over the last six years, and Parkside has averaged a 14.4% return over the last six years. Required retum 3. A stock has a required retum of 12.25%. The beta of the stock is 1.15 and the risk-free rate is 5%. What is the market risk premium? Market risk premium 4. Your portfolio consists of $100,000 invested in a stock which has a beta of 0.8,$150,000 invested in a stock which has a beta of 1.20, and $50,000 invested in a stock which has a beta of 1.80. The risk-free rate is 7%. Last year this portfolio had a required rate of return of 13%. This year nothing has changed except the market risk premium has increased by 2%. What are the portfolio's beta and required rate of return? Portfolio beta Required return