1.Suppose the beta of Microsoft trading under the symbol (MSFT) is 1.20, the risk-free rate is 2 percent, and the market average return is 8% Based on this sate the expected return is?

2.Suppose the beta of Microsoft trading under the symbol (MSFT) is 1.20, the risk-free rate is 2 percent, and the market average return is 8% Based on this sate the risk premium is closest to?

3.Investments A and B both offer an expected rate of return of 12. The risk (standard deviation) of A is 30 percent and the risk of B is 20 percent. Under the assumption that the an investor is risk averse and she wishes to invest in either A or B, then that investor should

Select one:

a. The answer cannot be determined without knowing investors' risk preferences.

b. prefer A to B.

c. prefer a portfolio including both A and B.

d. prefer B to A.