A portfolio consists of securities A and B and T-bills. The expected return on A is 5.90%. Stock B has a beta of 2.05. The market portfolio has a return of 6.30% and T-bills have a return of 2.40%. What is the portfolio return, if you invest 27% of your money in A, 56% in B, and the rest in T-bills?

a.

3.35%

b.

7.82%

c.

2.61%

d.

3.91%

e.

7.41%

Which of the following projects should you undertake if they are mutually exclusive? Project L that requires an initial investment of $105,000 and has an NPV of $11,000. Project M that requires an initial investment of $50,000 and has an NPV of $15,000. Project N that requires an initial investment of $60,000 and has an NPV of $14,000. Project O that requires an initial investment of $75,000 and has an NPV of $35,000.

a.

Project O

b.

Project L

c.

Project N

d.

Project M

e.

Projects O and N