Portfolio Beta

Your investment club has only two stocks in its portfolio. $15,000 is invested in a stock with a beta of 0.9, and $30,000 is invested in a stock with a beta of 1.1. What is the portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

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Required Rate of Return

AA Corporation's stock has a beta of 1.2. The risk-free rate is 5%, and the expected return on the market is 12%. What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to one decimal place.

_______________%

Expected Return: Discrete Distribution

A stock's return has the following distribution:

Demand for the Company's Products	Probability of This Demand Occurring			Rate of Return if This Demand Occurs (%)
Weak		0.1		-45	%
Below average		0.2		-9
Average		0.4		12
Above average		0.2		25
Strong		0.1		60
		1.0

Calculate the stocks expected return and standard deviation. Do not round intermediate calculations. Round your answers to two decimal places.

Expected return: ________________%

Standard deviation: ______________%

Required Rate of Return

Suppose r_RF = 5%, r_M = 10%, and r_A = 11%.

1. Calculate Stock A's beta. Round your answer to one decimal place. _______________

2. If Stock A's beta were 2.0, then what would be A's new required rate of return? Round your answer to one decimal place.

   ______________________%