A stock has a beta of 1.2, the expected return on the market is 14 percent, and the risk-free rate is 7.7 percent. What must the expected return on this stock be?

Multiple Choice

• 24.5%

• 15.87%

• 16.02%

• 14.5%

• 15.26%

A stock has an expected return of 18 percent, its beta is 1.45, and the expected return on the market is 14 percent. What must the risk-free rate be?

Multiple Choice

• 5.11%

• 4.86%

• 5.37%

• 5.32%

• -2.30%

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.1 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

Multiple Choice

• 0.90

• 1.99

• 1.90

• 1.80

• 0.95

You own a stock portfolio invested 35 percent in Stock Q, 20 percent in Stock R, 15 percent in Stock S, and 30 percent in Stock T. The betas for these four stocks are 1.49, 1.1, 0.69, and 0.62, respectively. What is the portfolio beta?

Multiple Choice

• 1.08

• 1.03

• 0.98

• 1.01

• 1.05

A stock has an expected return of 9 percent, its beta is 0.55, and the risk-free rate is 4.05 percent. What must the expected return on the market be?

Multiple Choice

• 13.70%

• 13.57%

• 12.40%

• 9.00%

• 13.05%

Consider the following information:

State of Economy	Probability of State of Economy	Rate of Return if State Occurs
Recession	.11	.04
Normal	.55	.11
Boom	.34	.33

Calculate the expected return.

Multiple Choice

• 15.99%

• 17.67%

• 2.67%

• 17.50%

• 16.83%