4. Calculate the variance of the following returns.

Year Return

1 -0.20

2 0.04

3 -0.14

4 0.25

5 0.14

Enter the answer with 6 decimals, e.g. 0.123456.

5. A stock has an expected return of 0.10, its beta is 0.95, and the expected return on the market is 0.05. What must the risk-free rate be? (Hint: Use CAPM) Enter the answer in 4 decimals e.g. 0.0123.

1. The Down and Out Co. just issued a dividend of $1.17 per share on its common stock. The company is expected to maintain a constant 0.05 growth rate in its dividends indefinit ely. If the stock sells for $27.71 a share, what is the company's cost of equity? Enter the answer with 4 decimals (e.g. 0.1234)

2. The Up and Coming Corporation's common stock has a beta of 0.74. If the risk-free rate is 0.04 and the expected return on the market is 0.07, what is the company's cost of equity capital? Enter the answer with 4 decimals (e.g. 0.1234).

3. Holdup Bank has an issue of preferred stock with a $0.52 stated dividend that just sold for $47.38 per share. What is the bank's cost of preferred stock?

Enter the answer with 4 decimals (e.g. 0.1234).