$2$A

Consider the following information:

State i Probability of State i Actual Return of Ford Inc

Boom $27\%25\%$

Normal $26\%8\%$

Bust $47\%-5\%$

What is the expected Return of Ford Inc? $($Answer as a percentage, and round to $2$ decimal places.$)$

$2$B

Over the past several weeks you have assembled a small stock portfolio via the purchase of small amounts of different company stocks. You know that the point of a portfolio is to reduce your overall exposure to systematic risk, but aren't sure exactly what the risk of your new portfolio is$.$ You have purchased the following : $$9,000$ of Ford Stock, $$4,000$ of John Deer Stock, and $$2,000$ of Health Care of America $($HCA$)$ Stock. You have estimated the betas of these stocks to be the following : a $\backslash$beta

of $4\mathrm{.}29$ for Ford, a $\backslash$beta

of $2\mathrm{.}50$ for John Deere, and a $\backslash$beta

of $2\mathrm{.}2$ for HCA. What is the beta of your portfolio? $($Round to $2$ digits$)$

Answer:

$2$C

You are considering buying some share in The Luther Corporation as part of your retirement account. First, you want to calculate the expected return for Luther Corp's stock to see if it meets your very high standards. You have estimate the $\backslash$beta

for Luther Corp to be $0\mathrm{.}59,$ the risk free rate in the market to be $2\%,$ and the expected return on the market to be $11.$ What is the expected return for Luther Corp? $($Answer in Percentage terms and Round to $2$ decimals$)$

$2$D

Over the past several weeks you have assembled a small stock portfolio via the purchase of small amounts of different company stocks. You know that the point of a portfolio is to reduce your overall exposure to systematic risk, but aren't sure exactly what the risk of your new portfolio is$.$ You have purchased the following : $$2,000$ of Tesla Stock, $$3,000$ of McDonald's Stock, and $$9,000$ of Boeing Stock. You have estimated the betas of these stocks to be the following : a $\backslash$beta

of $3\mathrm{.}33$ for Tesla, a $\backslash$beta

of $2\mathrm{.}37$ for McDonald's, and a $\backslash$beta

of $2\mathrm{.}4$ for Boeing. What is the beta of your portfolio? $($Round to $2$ digits$)$