Assume that the risk-free rate is 6% and the market risk premium is 8%.

What is the required return for the overall stock market? Round your answer to two decimal places. %

What is the required rate of return on a stock with a beta of 0.7? Round your answer to two decimal places. %

Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 2.20. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 0.75. What would your portfolio's new beta be? Do not round intermediate calculations. Round your answer to two decimal places.

A stock has a required return of 16%, the risk-free rate is 5%, and the market risk premium is 3%.

1. What is the stock's beta? Round your answer to two decimal places.
2. If the market risk premium increased to 10%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. Do not round intermediate calculations. Round your answer to two decimal places.
   1. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium.
   2. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
   3. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium.
   4. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
   5. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
   -Select-IIIIIIIVVItem 2 New stock's required rate of return will be %.

A stock's returns have the following distribution:

Demand for the Company's Products	Probability of This Demand Occurring	Rate of Return If This Demand Occurs
Weak	0.1	(30%)
Below average	0.1	(12)
Average	0.5	14
Above average	0.2	33
Strong	0.1	63
	1.0

Assume the risk-free rate is 3%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places.

Stock's expected return: %

Standard deviation: %

Coefficient of variation:

Sharpe ratio: