3. The risk-free rate of return is 4% and the market risk premium is 8%. What is the expected rate of return on a stock with a beta of 1.8?

4. Your portfolio is comprised of 30% of stock X, 50% of stock Y, and 20% of stock Z. Stock X has a beta of .6, stock Y has a beta of 1.4, and stock Z has a beta of 1.2. What is the beta of your portfolio?

5. A firm is evaluating a proposal which has an initial investment of $60,000 and has cash flows of $16,000 per year for five years. Calculate the payback period of the project. If the firms maximum acceptable payback period is 3 years, should the firm accept the project?