Bartman Industries		Reynolds Inc.		Winslow 5000
Year	Stock Price		Dividend		Stock Price		Dividend		Includes Dividends
2020	$17.25			$1.11			$50.25			$2.95			$11,995.85
2019	14.80			1.02			53.80			2.90			8,870.40
2018	16.65			0.95			50.25			2.80			8,776.18
2017	10.70			0.90			59.45			2.50			6,530.70
2016	11.42			0.85			62.20			2.30			5,665.73
2015	7.47			0.80			58.15			2.00			4,837.63

1.

Estimate Bartman's and Reynolds's betas by running regressions of their returns against the index's returns. Round your answers to four decimal places.

Bartman's beta:

Reynolds's beta:

Are these betas consistent with your graph?

These betas______consistent with the scatter diagrams.

2.

Assume that the risk-free rate on long-term Treasury bonds is 5.5%. Assume also that the average annual return on the Winslow 5000 is not a good estimate of the market's required returnit is too high. So use 10% as the expected return on the market. Use the SML equation to calculate the two companies' required returns. Round your answers to two decimal places.

Bartman's required return:

Reynolds's required return:

3.

If you formed a portfolio that consisted of 50% Bartman and 50% Reynolds, what would the portfolio's beta and required return be? Round your answer for the portfolio's beta to four decimal places and for the portfolio's required return to two decimal places.

Portfolio's beta:

Portfolio's required return:

4.

Suppose an investor wants to include Bartman Industries's stock in his portfolio. Stocks A, B, and C are currently in the portfolio, and their betas are 0.740, 0.924, and 1.283, respectively. Calculate the new portfolio's required return if it consists of 30% of Bartman, 20% of Stock A, 30% of Stock B, and 20% of Stock C. Round your answer to two decimal places.