1.Salt Lake City Services, Inc., provides maintenance services for commercial buildings. Currently, the beta on its common stock is 1.08. The risk-free rate is now 10 percent, and the expected return on the market portfolio is 15 percent. It is January 1, and the company is expected to pay a $2 per share dividend at the end of the year, and the dividend is expected to grow at a compound annual rate of 11 percent for many years to come. Based on the CAPM and other assumptions you might make, what dollar value would you place on one share of this common stock?

2.The following common stocks are available for investment:

COMMON STOCK (Ticker Symbol) BETA

Nanyang Business Systems (NBS) 1.40

Yunnan Garden Supply, Inc. (YUWHO) 0.80

Bird Nest Soups Company (SLURP) 0.60

Wacho.com! (WACHO) 1.80

Park City Cola Company (BURP) 1.05

Oldies Records, Ltd. (SHABOOM) 0.90

a. If you invest 20 percent of your funds in each of the first four securities, and 10 percent in each of the last two, what is the beta of your portfolio?

b. If the risk-free rate is 8 percent and the expected return on the market portfolio is 14 percent, what will be the portfolio's expected return?

3.Common stocks D, E, and F have the following characteristics with respect to expected return, standard deviation, and correlation between them: