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An investor holds a $200,000 portfolio consisting of the following stocks. The market's required rate of return (TM) is 10% and the risk-free rate (TRF)

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An investor holds a $200,000 portfolio consisting of the following stocks. The market's required rate of return (TM) is 10% and the risk-free rate (TRF) is 6%. Stock Beta A 1.4 Investment $80,000 40,000 50,000 30,000 B 0.8 1.0 D 1.2 26. What is the market risk premium? * A) 6% B) 4% C) 4.6% D) None of the above 27. What is the portfolio's beta? * OA) 1.15 B) 1 OC) 0 D) None of the above 28. What is the portfolio's required rate of return? O A) 6% B) 10% O C) 10.6% D) None of the above 29. Suppose British Petroleum (BP) has a hypothetical market beta of 1.12 and T-bond Beta of 0.6. The market index premium is 8.5% and risk premium of T-Bond is 4.5%. The risk free rate is 3%. Using the two-factor model of CAPM, what would be the expected return on the stock? * O A) 12.5% O B) 15.2% O C) 5.7% D) None of the above 30. The analysts at FNB Bank forecasted that the return on S&P500 index portfolio over the coming year will be 26%. The one year T-Bill rate is 6%. While examining the recent returns of the index, the analysts estimated that the variance of these returns will be 24%. What is the Sharpe ratio of the portfolio? * OA) 0.83 B) 0.408 C) 0.024 D) None of the above

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