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1. You have been given this probability distribution of the holding period return for KMP stock: State Probability Return 1 30% 20% 2 60% 12%
1. You have been given this probability distribution of the holding period return for KMP stock:
State Probability Return
1 30% 20%
2 60% 12%
3 10% -5%
What are the expected return and standard deviation for KMP stock?
2. Portfolio A has a beta of 1.5. The market risk premium, RM-Rf, is 4.5%, and the risk-free rate is 4.5%. What is the expected return of the portfolio based on CAPM?
3. Suppose you pay $9,700 for a $10,000 par Treasury bill maturing in 3 months. What is the effective annual rate of return for this investment?
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