1. If the market risk premium is 7%, the risk-free rate is 2% and the beta of a stock is 0.5, what is the expected return of the stock?

a.4.5%

b.3.5%

c.2.5%

d.5.5%

2. If the market risk premium is 7%, the risk-free rate is 2% and the beta of a stock is 0, what is the expected return of the stock?

	a.	5%
	b.	0%
	c.	7%
	d.	2%

3. A stock with a positive beta will move in the _____________ direction of the market. A stock with a beta greater than 1 will be _____________ sensitive to market movements.

	a.	opposite; less
	b.	same; less
	c.	same; more
	d.	opposite; more

THANK YOU!!