Problem $1$

Assume the market return for the past ten periods was $10\mathrm{.}42$;$11\mathrm{.}18$;$12\mathrm{.}66$;$11\mathrm{.}32$;$8\mathrm{.}06$;

$9\mathrm{.}68$;$10\mathrm{.}42$;$6\mathrm{.}46$;$15\mathrm{.}56$ and $12\mathrm{.}64\%$ respectively. According to prevailing expectations the next

period market return will be $7\mathrm{.}54\%.$ The risk$-$free rate on this market is $3\mathrm{.}04\%.$ Develop capital

market line equation for this market and present it graphically. Point out part of the diagram

representing leveraged portfolios. What is the CML slope?

Problem $2$

The market return for the last five periods was $10\mathrm{.}42$;$11\mathrm{.}18$;$12\mathrm{.}66$;$11\mathrm{.}32$ and $12\mathrm{.}64\%$

respectively. The return of $$ECON $469$ Inc.$$ company stocks for the same period was $15\mathrm{.}25$;

$17\mathrm{.}21$;$16\mathrm{.}09$;$15\mathrm{.}88$ and $15\mathrm{.}22\%.$ Compute the $$ECON $469$ Inc.$$ company beta ratio.

Problem $3$

Using problem $2$ data develop security market line equation for this market and present

it graphically. The market risk$-$free rate equals $3\mathrm{.}12\%.$