Answer the following questions with calculations please:

1. If an investor buys a T-bill at a bank discount quote of 6.80 with 120 days to maturity. What is the investor's actual annual rate of return on this investment?

2. If a price weighted stock index is based on 5 stocks. The stock prices for the five stocks are $14, $26, $90, $70 and $60. The price of the last stock was just split 2 for 1 and the stock price was halved from $60 to $30. What is the new divisor for this index?

3. A market value index has three stocks. Yesterday the three stocks were priced at $18, $30, and $90. The number of outstanding shares for each is 300,000 shares, 250,000 shares, and 100,000 shares, respectively. If the stock prices changed to $24, $27, and $135 today respectively, what is the one-day rate of return on the index?

4. A common stock has a required return of 17.5% and a beta of 1.75. If the expected risk free return is 3%, what is the expected return for the market based on the CAPM?

5. The expected return on the market portfolio is 15%. The risk-free rate is 8%. The expected return on XY Corp. common stock is 16%. The beta of XY Corp. common stock is 1.25. According to CAPM, Is the stock overpriced, underpriced, or fairly priced, Why?