1) XYZ has an expected return of 10% and a standard deviation of 20%. What is the expected return and standard deviation of your investment if you buy XYZ on margin (MR = .40). Assume your borrowing cost = 5%

2) Draw a cash flow diagram for a $1 million face value, 90 day t-bill at a discount yield of 6 percent. What is the Simple Interest Yield on the bill if held to maturity?

3) You buy a constant growth stock today for $100. It pays a dividend in year 1 of $5 and grows at 10 percent per year. Draw a cashflow diagram for the stock if you sell it at the end of year What is your average return on the stock over the two years?

4) You invest in an MBS 9, 30 year with a face value of $100,000. Draw a cash flow diagram for the MBS if it survives 8 years.