Q1) There is a 22.60% probability of a below average economy and a 77.40% probability of an average economy.If there is a below average economy stocks A and B will have returns of -6.90% and 8.80%, respectively.If there is an average economy stocks A and B will have returns of 9.30% and -8.10%, 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 21.30% probability of an average economy and a 78.70% probability of an above average economy.You invest 10.70% of your money in Stock S and 89.30% of your money in Stock T.In an average economy the expected returns for Stock S and Stock T are 14.00% and 13.10%, respectively.In an above average economy the the expected returns for Stock S and T are 29.30% and 27.90%, respectively.What is the expected return for this two stock portfolio?

Q3) You are invested 30.20% in growth stocks with a beta of 1.72, 23.50% in value stocks with a beta of 1.09, and 46.30% 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 = 1.04; expected return on the Market = 11.40%; expected return on T-bills = 2.30%; current stock Price = $5.35; expected stock price in one year = $13.18; expected dividend payment next year = $4.94. Calculate the

a) Required return for this stock

b) Expected return for this stock

Q5) The market risk premium for next period is 4.30% and the risk-free rate is 3.90%. Stock Z has a beta of 0.93 and an expected return of 12.80%. What is the:

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

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