Erickson Inc. is considering a capital budgeting project that has an expected return of 30% and a standard deviation of 25%. What is the projects coefficient of variation?

2- Ivan Knobel holds a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. He is in the process of buying 1,000 shares of Syngine Corp at $20 a share and adding it to his portfolio. Syngine has an expected return of 13.0% and a beta of 1.50. The total value of Ivans current portfolio is $80,000. What will the expected return and beta on the portfolio be after the purchase of the Syngine stock?

3- If companys beta were to double, would its market risk premium also double? Explain

Nystrand Corporations stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.50%, what is the market risk premium?

5- Company A has a beta of 0.70, while Company Bs beta is 1.20. The required return on the stock market is 12.00%, d the risk-free rate is 4.25%. What is the difference between As and Bs required rates of return?

6- The $10,000 million mutual fund Henry manages has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.20%. Henry now receives another $5.00 million, which he invests in stocks with an average beta of 0.85. What is the required rate of return on the new portfolio?

7- Data for Atwill Corporation is shown below. Now Atwill acquires some risky assets that cause its beta to increase by 30%. What is the stocks new required rate of return?

Initial beta 1.00

Initial required return 10.20%

Market risk premium, RPm 6.00%

Percentage increase in beta 30.00%

8- You have the following data on three stocks:

StockStandard DeviationBeta

A0.200.61

B0.250.79

C0.151.29

As arisk minimizer, you would choose Stock (a) if it is to be held in isolation? (b) if it is to be held as part of a well-diversified portfolio?

9- Consider the following information and then calculate the required rate of return for the Universal Investment Fund, which holds 4 stocks. The markets required rate of return is 13.25%, the risk-free rate is 6.00%, and the Funds assets are as follows:

StockInvestmentBeta

A$200,0001.50

B$300,000-0.50

C$500,0001.25

D$1,000,0000.75