1) EXPECTED RETURNS: PURCHASE PRICE $15. SELL FOR $17.50. ASSUME EXPECTED DIVIDENDS OF $0.75 @ SHARE EXPECTED GROWTH IS THE VALUE OF CAPITAL GAINS, EXPRESSED AS A PERCENTAGE: (SELL S-BUY $ )/BUY PRICE EXPECTED RETURNS FORMULA IS: (DIVIDEND / PURCHASE ) + GROWTH ANSWER: % 2) CAPITAL ASSETS PRICING MODEL FORMULA: RISK FREE RATE + [ BETA (EXPECTED MARKET RATE - RISK FREE RATE)] ASSUME: RISK FREE RATE 1.5; %; BETA 1.1; EXPECTED MARKET RATE 4.5% SOLVE FIRST THE PART IN PARENTHESES; THEN SOLVE THE PART IN BRACKETS AND LAST ADD RISK FREE RATE, ANSWER: 3) FOREIGN EXCHANGE FLUCTUATIONS MARCH 2018: $ 1 = 0.82 MARCH 2020 1 = $ 1.10 AN AMERICAN PURCHASES EUROBONDS IN MARCH 2018 FOR $35,000. THEY EARN 2.25 % PER ANNUM. HE SELLS THE BONDS IN MARCH 2020 AND REPATRIATES THE PROCEEDS. A) CALCULATE THE INVESTED SUM IN EUROS: B) CALCULATE THE TOTAL AMOUNT AVAILABLE AFTER 2 YEARS: C) CALCULATE THE AMOUNT AFTER CONVERSION INTO US $:$ D) CALCULATE ACTUAL RETURN PER YEAR: %