Q1) There is a 20.60% probability of a below average economy and a 79.40% probability of an average economy.If there is a below average economy stocks A and B will have returns of -1.80% and 8.50%, respectively.If there is an average economy stocks A and B will have returns of 15.80% and -9.70%, respectively. Compute the:

a) Expected Return for Stock A

b) Expected Return for Stock B

c) Standard Deviation for Stock A

d) Standard Deviation for Stock B

Q2) There is a 34.20% probability of an average economy and a 65.80% probability of an above average economy.You invest 35.70% of your money in Stock S and 64.30% of your money in Stock T.In an average economy the expected returns for Stock S and Stock T are 7.60% and 8.80%, respectively.In an above average economy the the expected returns for Stock S and T are 17.80% and 27.50%, respectively.What is the expected return for this two stock portfolio?

Q3) You are invested 21.80% in growth stocks with a beta of 2.00, 28.60% in value stocks with a beta of 0.60, and 49.60% in the market portfolio.What is the beta of your portfolio?

Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 1.19; expected return on the Market = 8.50%; expected return on T-bills = 1.10%; current stock Price = $6.40; expected stock price in one year = $12.84; expected dividend payment next year = $3.29. Calculate the

a) Required return for this stock

b) Expected return for this stock

Q5) The market risk premium for next period is 4.80% and the risk-free rate is 3.00%. Stock Z has a beta of 0.70 and an expected return of 12.90%. What is the:

a) Market's reward-to-risk ratio?

b) Stock Z's reward-to-risk ratio