1. An investor, purchased a stock for $135 per share (after costs) and receives the following dividends at the end of each year for three years:

Year 1 $5.65

Year 2 $4.90

Year 3 $6.20

Just following the Year 3 dividend, he/she sells the stock for $165.32 per share (after costs). What is the money-weighted rate of return the investor has earned from the stock? (Show your work)

2. You invest 25 percent of your money in the risk-free asset, 50 percent in the market portfolio, and remaining in a U.S. stock that has a beta of 1.5. Given that the risk-free rate is 3 percent and the market return is 10 percent, what is the portfolios expected return? (Show your work)