A. You bought one of Great White Shark Repellant Co.s 11 percent coupon bonds one year ago for $780. These bonds make annual payments and mature 12 years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 13 percent. If the inflation rate was 3.1 percent over the past year, what was your total real return on investment?

a.23.31%

b.24.48%

c.23.41%

d.9.63%

e.31.08%

B. Suppose a stock had an initial price of $71 per share, paid a dividend of $1.65 per share during the year, and had an ending share price of $82. Compute the percentage total return.

a.17.82

b.15.43

c.21.69

d.18.71

C. State of Economy Probability of State of Economy Rate of Return if State Occurs Recession 0.11 -0.08 Normal 0.55 0.13 Boom 0.34 0.30 Calculate the expected return.

a.15.65%

b.17.13%

c.17.29%

d.16.47%

e. 2.33%

D.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 0.44, 1.81, 1.06, and 1.61, respectively. What is the portfolio beta?

a.1.1

b.1.13

c.1.22

d.1.18

e.1.16

E. A stock has a beta of 1.45, the expected return on the market is 9 percent, and the risk-free rate is 4.05 percent. What must the expected return on this stock be?

a. 11.68%

b. 17.1%

c. 10.67%

d.11.23%

e. 11.79%