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1. Use the following information to answer the question(s) below. Suppose that the market portfolio is equally likely to increase by 24% or decrease by

1.Use the following information to answer the question(s) below.

Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "X" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down. Security "Y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down. Security "Z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.

What is the risk free rate?

What is the expected return on market portfolio?

What is the expected return on security with a beta of 0.8 is closest to:

3) What is the expected return on security with a beta of 0.8 is closest to:?1?The excess return is the difference between the average return on a security and the average return for:

A) Corporate Bonds.

B) a portfolio of securities with similar risk.

C) a broad based market portfolio like the S&P 500 index.

D) Treasury Bills.

Use the table for the question(s) below.

Consider the following probability distribution of returns for Alpha Corporation:

Current Stock Price ($)

Stock Price in One Year ($)

Return R

Probability PR

$35

75%

25%

$20

$25

25%

50%

$15

-25%

25%

?2) What is the the standard deviation of the return on Alpha Corporation?

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