1. A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on the security market line. A risk-free asset is yielding 3.2 percent. You want to create a portfolio that is comprised of the stock and the risk free and will have a portfolio beta of 0.6. What is the expected return on this portfolio?

   		10.41 percent
   		9.20 percent
   		12.33 percent
   		11.87 percent

QUESTION 25

1. The Bamboo Inc. has a cost of equity of 16 percent and a pre-tax cost of debt of 8 percent. The firm's target weighted average cost of capital is 12 percent and its tax rate is 20 percent. What is the firm's debt-equity ratio (D/E)?

   		0.72
   		0.89
   		1.16
   		0.97