Finance Questions. 1.)Charles Carlow borrowed $3,500 to consolidate his debts. Since Charles had an excellent credit rating, he was able to borrow at a 12% effective annual rate. Charles will make equal payments for each of the next 36 months. Which one of the following values is closest to his monthly payments? A) $115 B) $118 C) $121 D) $122 E) $123 2.) Stock A has an expected return of 20%, and stock B has an expected return of 4%. However, the risk of stock A as measured by its variance is 3 times that of stock B. If the two stocks are combined equally in a portfolio, what would be the portfolio's expected return? A) 4% B) 12% C) 20% D) Greater than 20% E) Need more information to answer. 3.) A portfolio has 25% of its funds invested in Security C and 75% of its funds invested in Security D. Security C has an expected return of 8% and a standard deviation of 6%. Security D has an expected return of 10% and a standard deviation of 10%. The securities have a coefficient of correlation of .6. Which of the following values is closest to portfolio return and variance? A) .090; .0081 B) .095; .001675 C) .095; .0072 D) .100; .00849 E) Cannot calculate without the number of covariance terms. 4.?)A portfolio contains four assets. Asset 1 has a beta of .8 and comprises 30% of the portfolio. Asset 2 has a beta of 1.1 and comprises 30% of the portfolio. Asset 3 has a beta of 1.5 and comprises 20% of the portfolio. Asset 4 has a beta of 1.6 and comprises the remaining 20% of the portfolio. If the riskless rate is expected to be 3% and the market risk premium is 6%, what is the beta of the portfolio? A) 0.80 B) 1.10 C) 1.19 D) 1.25 E) 1.40 5.)You sell all of your investments in stocks A and B and invest the proceeds in the riskfree asset. The risk-free rate is 4%. The coefficient of variation of your new portfolio (consisting of 50% of stock C and 50% of the risk-free asset) is a. 0.845 b. 0.917 c. 1.000 d. 1.091 e. 1.300 6.)The present value of the following set of cash flows is +$4,000 when evaluated at a nominal interest rate of 6%. The cash flows are as follows; Year 1 =$1,000, Year 2=$2,000, Year 3=$3,000, Year 4=????, and Year 5=$5,000. To within $5, what is the value of the missing cash flow in Year 4? a. -$6,285 b. -$4,980 c. -$4,000 d. +$4,980 e. +$8,980 7.)Exactly 4 years ago you took a $150,000 30-year mortgage with an interest rate of 7.75% p.a. Today (i.e. exactly after your 48th payment) you do a ?no-cost refinancing? by switching to a 15-year mortgage with an interest rate of 6.0%. What will be the monthly payment on the new 15-year mortgage? (Hint: ?No-cost refinancing? means that the total initial amount of the new mortgage equals the remaining principal of the old mortgage after the 48th payment) a. 863.74 b. 1,032.10 c. 1,074.62 d. 1,215.70 e. 1,356.05 8. Attached in Word File

You have a portfolio consisting of stocks A, B and C. The investment proportions are: 20% are invested in stock A, 30% are invested in stock B, 50% are invested in stock C. Furthermore you are given the following information: Stock A: variation 1.25 Expected Return Beta 0.7 Standard Dev. 8% Coefficient of ? Stock B: variation ? Expected Return Beta 1.1 Standard Dev. ? Coefficient of 16% Stock C: Expected Return Beta ? Portfolio(A,B,C) variation ? Standard Dev. 18% Expected Return Beta 1.27 Standard Dev. 14.2% Coefficient of variation 24% ? Coefficient of 18.46% What is the expected return of Stock B? a.8.0% b.12.0% c.14.2% d.16.0% e.18.0% 6. What is the standard deviation of stock A? a.8.0% b.8.3% c.10.0% d.13.2% e.18.0% 7. What is the Beta of stock C? a. 1.10 b. 1.20 c. 1.38 d. 1.46 e. 1.60 8. You sell all of your investments in stocks A and B and invest the proceeds in the riskfreeasset. The risk-free rate is 4%. The coefficient of variation of your new portfolio (consisting of 50% of stock C and 50% of the risk-free asset) is a. 0.845 b. 0.917 c. 1.000 d. 1.091 e. 1.300