Diamond House Exporting has a beta of 1.50, the risk-free rate of interest is currently 12%, and the required return on the market portfolio is 18%. The company plans to pay a dividend of $2.45 per share in the coming year and anticipates that future dividends will increase at an annual rate consistent with that experienced over the past few years. What is the value of 1 share?

Year ______ Dividend 2013 2.32 2014 2.21 2015 2.10

The market risk premium for Asset A is

a. 3% b. 6% c. 8.5% d. 9%

The Treasury Bill rate is

a. 0 % b. 6% c. 9% d. 12%

At a beta of 1.2, the required return is

a. 7.2 percent. b. 13.2 percent. c. 12.5 percent. d. 15 percent.

Which asset would you recommend to a risk-averse investor?

a. Asset A b. Asset B c. Asset C d. Asset D This is all one question based off above info

Asset A		Asset B
Rate of Return	Probability	Rate of Return	Probability
10%	30%	5%	40%
15%	40%	15%	20%
20%	30%	25%	40%