1.) Over the past ten years, large-company stocks have returned 11.2 percent. The risk premium on these stocks was 4.8 percent and the inflation rate was 3.7 percent. What was the risk-free rate of return? A.) 2.7% B.) 6.4% C.) 7.5% D.) 8.5% E.) 10.1%

2.) You want to create a $10,000 portfolio that has an expected return of 12 percent. Currently, you own $2,500 of stock A and $5,000 of stock B. The expected return for stock A is 14 percent, and for stock B it is 7 percent. What is the expected rate of return for stock C? A.) 17.25% B.) 17.58% C.) 18.65% D.) 20.00% E.) 22.02%

3.) The internal rate of return is:

A.) unaffected by a change in the cost of a project.

B.) unaffected by the timing of the cash inflows.

C.) used to ascertain which one of two mutually exclusive projects should be accepted.

D.) the minimal rate that produces an accept decision given the net present value rule.

E.) biased towards low-cost projects.