2-A A stock has a beta of 1.15, the expected return on the market is 11 percent, and the risk-free rate is 5 percent. What must the expected return on this stock be? (2 Marks)

2-B Security A has an expected return of 10 percent and a standard deviation of 43 percent per year. Security B has an expected return of 15 percent and a standard deviation of 62 percent per year. a. What is the expected return on a portfolio composed of 30 percent of Security A and 70 percent of Security B? b. If the correlation between the returns of Security A and Security B is 0.25, what is the standard deviation of the portfolio described in part (a)? (2 Marks)

2-C Narottam Ltd has 11% debentures (Rs 1000/- face value) worth Rs 800 Cr outstanding. These debentures are due to be redeemed in another 4 years and are trading at Rs 970/- currently. The firm also has issued 11.2 crore shares (FV Rs 10/- each) having market capitalisation of Rs 1025 crores. Assuming that investors expect a return of 18% on firms of similar risk profile, calculate the overall cost of capital for Narottam Ltd. Consider corporate tax rate at 25% and risk-free rate of 6%.