16A) You currently own a three-asset portfolio comprised of stocks X, Y and Z. You have $1,515 invested in stock X, $1,770 invested in stock Y, and $2,208 invested in stock Z. You ran a Market Model Regression (MMR), for each of the three stocks, X, Y, and Z, and estimated values for beta of 0.26, 0.67, and 0.69 respectively. Youve estimated the expected return of the broad stock market to be 8.7% per year. The risk-free rate is currently 3.4% per year. Youve decided to sell your current portfolio and invest all the proceeds into an efficient portfolio (i.e. one with zero idiosyncratic risk), which has the same expected return as your current portfolio. As you know, the efficient portfolio is a two-asset portfolio comprised of both T-Bills and the broad stock-market. Determine the total dollar amount that youll invest in the market portfolio (after selling the three stocks). Answer in dollars and cents.

16B)Youve just liquidated a portfolio of 13 stocks, and raised a total of $10,004. You now wish to invest 100% of the proceeds in an efficient portfolio with the same expected return (and therefore the same beta) as your old portfolio. The beta of the old portfolio was 1.35.

Determine how much money you will invest in (i) the broad stock-market, and (ii) in T-Bills.

In the answer box below, enter the dollar amount that youll be investing in T-Bills.

If youll be buying T-Bills, then enter your answer as a positive value. If instead of buying T-Bills youll need to borrow money (in order to help pay for your purchase of the market portfolio), then enter your answer as a negative value.

16C) You currently own 553 shares of Yellow Cone stock. Yellow Cone stock is currently trading at $29.07 per share.You seek to determine if you should sell Yellow Cone stock, or continue to hold it. In order to do so, youve decided to compute the fair value of Yellow Cone stock (and then compare the fair price to the current trading price). You recently ran a Market Model Regression (MMR), on Yellow Cone (versus the Russell 3000 stock market index) and estimated the beta of Yellow Cone to be 1.11.Youve also estimated the expected return of the broad stock market to be 7.8% per year. The risk-free rate is currently 3.2% per year.Yellow Cone pays cash dividends annually. The next dividend of $1.61 per share is expected to be paid in one year. Dividends are expected to grow thereafter at an annual rate of 2.3% forever. Determine the fair value of Yellow Cone stock per share. Enter you answer in dollars and cents.