i) Provide an intuitive discussion of beta and its importance for measuring risk.

ii) Consider the following probability distribution of returns for Mason Corporation:

Current Stock Price (Ghc)	n	Price in One Year (Ghc)	n	Return	n	Probability
		Ghc35		40%		25%
Ghc25		Ghc25		0%		50%
		Ghc20		-20%		25%

You are required to compute the expected return and standard deviation of return on Mason Corporation.

2. Security A has an expected rate of return of 22% and a beta of 2.5. Security B has a beta of 1.20. If the Treasury bill rate is 10%, what is the expected rate of return for security B?

1. What is the benefit to diversification? Will diversification always lead to greater expected portfolio returns?

2. Your company purchased Uptown Records stock for Ghc14.65 and sold it 6 months later for Ghc17.38 after receiving a Ghc0.25 dividend. What was your company's holding period return (HPR); what was your Annual Percentage Rate (APR); and what was your Effective Annual Rate (EAR)?