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The risk-free rate is 6%, the market risk premium is 11.3%, and the stocks beta is 0.34. What is the required rate of return on the stock, E(Ri)?

Use the CAPM equation.

22You have a $64,237 portfolio that consists of $18,557 invested in Stock A, $23,141 invested in Stock B, $8,327 invested in Stock C, and the remainder in Stock D. The portfolio has a return of 21.6 percent. The return for Stock A is 10.3 percent, for Stock B is 28.1 percent, and for Stock C is 12 percent. What is the return for Stock D?

23You have invested $87,512 portfolio in three securities. The three securities comprise of the risk-free asset, Stock A, and Stock B. The beta of stock A is 2.2 while the beta of stock B is 0.2. 13% of the portfolio is invested in the risk-free security. What is the dollar amount invested in stock B if the beta of the portfolio is 1.2?

25

Based on the following information, what is the portfolio beta?

Stock	Value	Beta
A	$11,908	2.99
B	$41,665	0.41
C	$9,104	2.07
D	$5,089	0.15

27ABC Company has $1,000 face value bonds outstanding. These bonds pay interest semiannually, mature in 12 years, and have a 8.5 percent coupon.The current price of the bond is $1020. What is the yield to maturity?