1. You own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 10 percent in Stock S, and 45 percent in Stock T. The betas for these four stocks are 1.08, 0.97, 0.72, and 0.43, respectively. What is the portfolio beta?

0.77

0.69

0.74

0.73

0.71

2. Consider the following information:

State of Economy	Probability of State of Economy	Rate of Return if State Occurs
Recession	0.21	-0.07
Normal	0.35	0.14
Boom	0.44	0.24

Required:

Calculate the expected return.

14.69%

14.55%

13.99%

13.29%

2.07%