A.

Given the following information about the returns of stocks A, B, and C, what is the expected return of a portfolio invested 30% in stock A, 40% in stock B, and 30% in stock C?

State of economy	Probability	Stock A	Stock B	Stock C
Boom	0.16	0.35	0.2	0.25
Good	0.29	0.17	0.2	0.13
Poor	0.21	0.01	0.03	0.08
Bust	--	-0.16	-0.19	-0.18

Enter answer in percents.

B.

A stock has an expected return of 10.8 percent, the risk-free rate is 4.6 percent, and the market risk premium is 7.2 percent. What must the beta of this stock be?

C.

You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 1.25 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio?