6.The stock dividends are trending up-ward at a stable growth rate 10%. The last year dividend was $(50+number). The risk-adjusted rate of interest is 11 percents. Investor is going to hold the stock for a long period.

7.In 2014, the yield on short-term government securities was about 7.5 percent. Suppose the expected return required by the marketfor a portfolio with a beta of 1.0 is 9.7 percent. According to CAPM:

What is the expected rate return on the market portfolio?

What wouldthe expected return be on a zero beta stock?

Suppose you considerbuying a share of stock at a price of $12. The stock is expected to pay a dividend of $2 next year and to sell then for $14. The stock risk has been evaluated at beta=0.7. If the stock overpriced or underpriced?

8.Assume that you manage a risky portfolio with an expectedrate of return of 40 percentand a standard deviation of 35 percent. The T-bill rate is 8 percent.

Your client chooses to invest 70 percent of a portfolio in your fundand 30 percent in a T-bill money market fund.

What is the expected return and standard deviation of your client's portfolio?

Suppose your risky portfolio includes the following investments in the given proportions:

Stock A 30%

Stock B 25%

Stock C 45%

What are the investments proportions of your client's overall portfolio, including the positions in T-bills?

What is the reward-to-variability ratio (S) of your risky portfolio (S-the increase in the expected return of the chosen portfolio per unitof additional standard deviation, or more directly, the measure of extra return per risk) ?

9.Suppose, you have to pay debt of $400,000 in 4 years. You can invest money in 2 bonds:

The First bond. Bond without coupons with maturity of 3 years. The current price of it is $50,4 par value is 70. The Second bond. It is a coupon bond with maturity of 5 years and coupon rate of 8, par value is 100, current price is 90. Describe the plan of portfolio construction.

10. In 2014, the yield on short-term government securities was about 7.5 percent. Suppose the expected return required by the marketfor a portfolio with a beta of 1.0 is 9.7 percent. According to CAPM:

What is the expected rate return on the market portfolio?

What wouldthe expected return be on a zero beta stock?

Suppose you considerbuying a share of stock at a price of $12. The stock is expected to pay a dividend of $2 next year and to sell then for $14. The stock risk has been evaluated at beta= 0.7. If the stock overpriced or underpriced?