1. Based on the information below, which investment is better based on the risk and return of each. Why? (Hint: look at pages 204-205) Please work out the chart and show your work. Common Stock A Common Stock B Probability Return Probability Return 0.3 11% 0.2 -5% 0.4 15% 0.3 6% 0.3 19% 0.3 14% 0.2 22% 2. (A) Define holding period returns. (B) From the price data below, compute the holding-period returns for periods 2 through 4. Period Stock Price 1 $20 2 $23 3 $21 4 $25 3. (A) What is a portfolio beta and what does it tell us about the portfolio? (B) From the information below, determine the expected return and beta for the following portfolio. Stock Percentage of Portfolio Beta Expected Return 1 40% 1.2 16% 2 25% 0.75 17% 3 35% 1.6 13% 4. You Corp, has a beta of .80. if the expected market return is 10 percent and the risk free rate is 3 percent, what is the appropriate rate of return using CAPM? 5. The expected return for the general market is 12.1 percent and the risk premium in the market is 8.5 percent. You Corp, AFC Inc, and NPV Inc have betas of 0.795, 0.693, and 0.475 respectively. What are the corresponding required rates of return for the three securities?