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21 ) There is a 26 . 10% probability of a below average economy and a 73. 90 % probability of an average economy .

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21 ) There is a 26 . 10% probability of a below average economy and a 73. 90 % probability of an average economy . If there is a below average* economy stocks A and B will have returns of 2. 90% and 15.80% , respectively . If there is an average economy stocks A and B will have returns of 7 . 20% and 4 . 00% , respectively . Compute the* a ) Expected Return for Stock A ( 0. 75 points ) :` b ) Expected Return for Stock B ( 0. 75 points ) :` C ) Standard Deviation for Stock A ( 0 . 75 points ) : d ) Standard Deviation for Stock B ( 0. 75 points ) : Q 2 ) There is a 19 . 90% probability of an average economy and a 80 . 10% probability of an above average economy . You invest 35 . 70% of your* money in Stock S and 64 . 30% of your money in Stock T . In an average* economy the expected returns for Stock S and Stock T are 13. 90% and 3. 40% , respectively . In an above average economy the the expected* returns for Stock S and T are 19 . 10% and 28 . 60% , respectively . What is the expected return for this two stock portfolio ? ( 2 points ) Q 3 ) You are invested 19 .30% in growth stocks with a beta of 1 .68 , 39.50 % in value stocks with a beta of 1 . 42 , and 41 . 20% in the market portfolio . What is the beta of your portfolio ? ( 1 point ) 24 ) An analyst gathered the following information for a stock and market parameters : Stock beta = 1 . 20 ; expected return on the Market = 10 .30% ; expected return on T- bills = 1 . 20%; current stock Price = $8.69 ; expected stock price in one year = $9.97 ; expected dividend payment next year = $3. 04 . Calculate the* a ) Required return for this stock ( 1 point ) : b ) Expected return for this stock ( 1 point ) : Q5 ) The market risk premium for next period is 9.50% and the risk-free rate $ 1. 80% . Stock Z has a beta of 1 . 10 and an expected return of 12.00% . What is the :" a) Market's reward - to - risk ratio ? ( 1 point ) : b ) Stock Z's reward - to - risk ratio ( 1 point )

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