1. Find the return and standard deviation of the portfolio That invests in 2 stocks as follows:
		Stock 1	40,533
		Stock 2	50,533
		Probability	Stock 1	Stock 2
Recession		35%	-10%	-5%
Normal		50%	5%	10%
Boom		15%	30%	25%
a. Portfolio return(5)
b. Portfolio standard deviation(5)
2. If next year, GM earned a return of 23%, find the UNEXPECTED return not explained by CAPM. GM's corporate tax rate is 35% and the following data. (10)
		Beta		1.5
		Risk Free Rate		3%
		Expected Market return		11%
3. Interest rates after retirement will be 7.5% APR compounded monthly. When you retire, you will spend 300,000 for a trip around the world. You plan to live 30 years after retirement, and leave 1 million for your kids. You have $3,000 to invest today, and 40 years to save up for this retirement earning 11% before retirement (10)
4. Given the following data and an interest rate of 8.0%
	Year			Amount
	1			6,053
	2			$5,200
	3			$6,900
	4			$9,700
a. Find the present value of the cash flows (5)
b. Find the future value of the cash flows in year 4 (5)
5. All County Insurance, Inc. promises to pay Ted $1 million on his 65th birthday in return for a one-time payment of $90,000 today. (Ted just turned 20.) At what rate of interest would Ted be indifferent between accepting the company's offer and investing the premium on his own?(4) You can compound annually.
6	You wish to buy a home worth			802,665	in a fully amortized loan
	You are given two choices for financing.
Choice 1: 35 year loan with interest rates of 6.7% with payments made monthly.
Choice 2: 20 year loan with interest rates of 6.0% with payments made monthly.
How much will you have paid in INTEREST for this house under these two scenarios? (10)
7. You can invest in 2 stocks.
		Stock 1	Stock 2
$ invested		7,053	9,053
Expected return		10%	15%
Standard Deviation		20%	40%
Correlation		0.4
Find the expected return of the portfolio(3)
Find the standard deviation of the portfolio(5)