1. A stock has an expected return of 10.2%, the risk-free rate 4.1% and the market risk premium is 7.2%. Calculate the beta of this stock.

(3 marks)

State of economy	Probability	Rate of returns
		Stock A	Stock B	Stock C
Boom	0.35	0.24	0.36	0.55
Normal	0.50	0.17	0.13	0.09
Bust	0.15	0	0.28	0.45

2. Base on the table above, you invested 40% on Stock A and B and 20% on Stock C. Calculate the expected return on this portfolio.

(10 marks)