13. A particular stock has a beta of 1.4 and an expected return of 13%. If the expected risk premium on the market portfolio is 6%, whats the expected return on the market portfolio?

A. 10.6%

B. 4.6%

C. 8.4%

D. 9.3%

14. The stock of Alpha Company has an expected return of 15.5% and a beta of 1.5, and Gamma Company stock has an expected return of 13.4% and a beta of 1.2. Assume the CAPM holds. Whats the expected return on the market?

A. 12%

B. 7%

C. 10.3%

D. 11.2%

15. The CAPM (capital asset pricing model) assumes that:

a. all assets can be traded

b. investors are risk-averse

c. investors have homogeneous expectations

d. all of the above

16. A portfolio has 40% invested in Asset 1 and 60% invested in Asset 2. If Asset 1 has a beta of 1.2 and Asset 2 has a beta of 1.8, whats the beta of the portfolio?

A. 1.50

B. 1.56

C. 1.20

D. 1.80