1. You own a portfolio that has $2,050 invested in Stock A and $3,250 invested in Stock B. If the expected returns on these stocks are 10 percent and 16 percent, respectively, what is the expected return on the portfolio?(Do not round your intermediate calculations.)

Multiple Choice

• 13.00%

• 14.36%

• 13.68%

• 12.32%

2. You own a stock portfolio invested 30 percent in Stock Q, 25 percent in Stock R, 10 percent in Stock S, and 35 percent in Stock T. The betas for these four stocks are 0.95, 1.5, 0.94, and 1.63, respectively. What is the portfolio beta?

Multiple Choice

• 1.35

• 1.39

• 1.26

• 1.32

• 1.3

3. A stock has a beta of 1.25, the expected return on the market is 13 percent, and the risk-free rate is 6.5 percent. What must the expected return on this stock be?

Multiple Choice

• 22.75%

• 13.89%

• 14.62%

• 15.36%

• 15.21%

4. Consider the following information:

State of Economy	Probability of State of Economy	Rate of Return if State Occurs
Recession	0.21	-0.03
Normal	0.65	0.14
Boom	0.14	0.23

Required:

Calculate the expected return.

Multiple Choice

• 12.27%

• 2.27%

• 11.11%

• 11.69%

• 12.16%