5. Samsung has $150,000 invested in a 2-stock portfolio. $65,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Ys beta is 0.70. What is the portfolio's beta? *

a) 1.2

b) 1.02

c) 1.046

d) 1.46

None of the above

6. Life Inc's stock has an expected return of 13%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 6%, what is the market risk premium? *

a) 5.6%

b) 6.5%

c) 5.8%

d) 4.5%

None of the above

7. If an investor holds the following portfolio, what is the portfolio's beta? *

a) 1.5

b) 1.1.

c) 1.7

d) 1.3

None of the above

8. Assume that you manage a $10 million mutual fund that has a beta of 1.05 and a 9.5% required return. The risk-free rate is 4.2%. You now receive another $5 million, which you invest in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? *

a) 8.83%

b) 8.45%

c) 9.83%

d) 6.45%

None of the above