1-Suppose you are an average risk-averse investor who can purchase only one of the folowing stocks. which should you purchase? Explain your reasoning.

investment	expected return	standard deviation
Stock M	6%	4%
Stock N	18%	12%
Stock O	12%	7%

2-Rebecca invested $9,000 in a stock that has an expected return equal to 18 percent and $21,000 in a stock with an 8 percent expected return. what is the portfolio`s expected return?

3-Currently, the risk-free return is 3 percent, and the expected market rate of return is 9 percent. What is the expected return of the following three stock portfolio?

Amount invested	Beta
$350,000	1
$250,000	.2
$400,000	2.5

4-Compute the (a) expected return and (b) standard deviation of the following investments:

Probability rabc r Rst

0.1 22.0% -2.0%

0.6 12.0 12.0

0.3 2.0 30.0

(c) Suppose you form a portofolio that consists of 60 percent investment RST. Compute the expected returnand standard deviation of the portofolio.