1. You plan on purchasing 3 stocks and one risk free asset (a treasury bond) for your investment portfolio. You want to create a portfolio equally as risky as the market and you have $100,000 to invest. A partially completed spreadsheet is presented below to indicate your investments and their Betas:

Investment Investment Amount Beta

Stock A $30,000 0.80

Stock B $40,000 1.30

Stock C 1.20

Treasury Bond

What is the investment amount of the Treasury Bond in your portfolio?

Group of answer choices

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2. You are considering investing in a particular stock next year. You have obtained the actual returns for this stock for the past 5 years and have calculated the following statistics: Average Return (Mean) - 12.8%; Variance - .0305; Standard Deviation - 17.47%. All #s are positive #s. During these last 5 years, the average inflation rate was 3.5% What was the average real return for this stock?

Group of answer choices

Between 9.5% - 10.5%

Between 8.5% - 9.5%

Between 7.5% - 8.5%

Between 6.5% - 7.5%

Between 5.5% - 6.5%

Between 4.5% - 5.5%

3. You plan on purchasing 3 stocks and one risk free asset (a treasury bond) for your investment portfolio. You want to create a portfolio equally as risky as the market and you have $100,000 to invest. A partially completed spreadsheet is presented below to indicate your investments and their Betas:

Investment Investment Amount Beta

Stock A $30,000 0.80

Stock B $40,000 1.30

Stock C 1.20

Treasury Bond

What is the investment amount of the Treasury Bond in your portfolio?

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

4. Which statement is correct about common stocks and preferred stocks?

Group of answer choices

The price of a stock is equal to the net present value of its dividends paid and declared by its Board of Directors.

Holding dividends (Do) and its growth rate (g) constant, the stock price will increase if the required return (r) increases.

Preferred stocks will always be valued more than common stocks because preferred stock dividends must be paid while common stock dividends do not.

Common stock dividends are tax deductible to the stockholder.

The dividend yield on the preferred stock is equal to the firm's retention ratio times its Return on Assets (ROA).

None of the above statements are correct.