1. I-Cloud has 5 million shares of stock outstanding, stockholders equity of $80 mm, EBIT of $10 million, net income of $5 million and stock price of $20. What is I-Clouds PE ratio?

A. 2

B. 4

C. 13

D. 20

2. You research Stock S and determine its covariance with the overall market is 5. Your research also shows that the standard deviation of overall market returns is 2. What is the beta of Stock S?

A. 2.50

B. 1.25

C. 0.80

D. 0.40