1.Friendly Airlines stock is currently selling for $37.50 per share. If the stock pays a dividend of $1.25 and the stock price in one year is $40.00, what is the total return on the stock (in percent)?

2.In a game of chance, the probability of winning $50 is 60 percent and the probability of losing $50 is 40 percent. What is the expected value of the game?

3. Barbara is considering investing in a stock and the return on that investment is sensitive to economic conditions. Her analysis suggests that there will be four possible economic states as follows. What is the expected return on the stock?

STATE	PROBABILITY	RETURN %
Boom	0.10	20
Good	0.40	15
Level	0.30	10
Slump	0.20	-5

4.

Using the information in the question above, what is the standard deviation of the return on Barbara's stock?

5.

What is the expected return on a portfolio comprised of $3,000 in stock A and $5,000 in stock B (in percent)?

STATE	PROBABILITY	RETURN % (A)	RETURN % (B)
Boom	0.20	30	50
Normal	0.80	10	10

6.

Suppose you invest $4,500 in Stock A and $5,500 in Stock B. The variance of Stock A is 10 percent, the variance of Stock B is 20 percent, and the covariance between the two stocks is 1.87 percent. What is the standard deviation of your portfolio?

7.

Suppose the risk free interest rate is 4.20 percent, the market risk premium is 6.00 percent and the beta for AAPL stock is 1.30. What is the expected return on AAPL stock?