7. You're analyzing the stock of a certain company. The most recent dividend paid was $10 dollars per share. The company's discount rate is 12%, and the firm is expected to grow at 4% per year forever. What should be the stock price today?

8. Assume that as an investor, you decide to invest part of your wealth in a risky asset that has an expected return of 12%, and a standard deviation of 12%. You invest the rest of your capital in the risk-free rate, which offers a return of 5%. You want the resulting portfolio to have an expected return of 5%. What percentage of your capital should you invest in the risky asset?

9. Assume that as an investor, you decide to invest 36% of your wealth in a risky asset that has an expected return of 19%, and a standard deviation of 12%. You invest the rest of your capital in the risk-free rate, which offers a return of 4%. What is your portfolio's expected return?

10. Assume that as an investor, you decide to invest 23% of your wealth in a risky asset that has an expected return of 19%, and a standard deviation of 19%. You invest the rest of your capital in the risk-free rate, which offers a return of 4%. What is your portfolio's standard deviation?

11. Given an optimal risky portfolio with expected return of 9% and standard deviation of 14% and a risk free rate of 4%, what is the slope of the best feasible CAL?

12. Consider the single-index model. The alpha of a stock is 0%. The return on the market index is 13%. The risk-free rate of return is 4%. The stock earns a return that exceeds the risk-free rate by 9% and there are no firm-specific events affecting the stock performance. The beta of the stock is _______.

13. The index model has been estimated for stocks A and B with the following results:

R(A) = 0.02 + 1.2Rm

R(B) = 0.02 + 0.9Rm

Additionally, the standard deviation of the market index is 14%.

What is the covariance between stocks A and B?