Q1) There is a 31.00% probability of a below average economy and a 69.00% probability of an average economy.If there is a below average economy stocks A and B will have returns of -8.40% and 18.90%, respectively.If there is an average economy stocks A and B will have returns of 18.40% and -8.60%, 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 19.30% probability of an average economy and a 80.70% probability of an above average economy.You invest 46.70% of your money in Stock S and 53.30% of your money in Stock T.In an average economy the expected returns for Stock S and Stock T are 7.80% and 14.20%, respectively.In an above average economy the the expected returns for Stock S and T are 22.60% and 13.30%, respectively.What is the expected return for this two stock portfolio?

Q3) You are invested 33.60% in growth stocks with a beta of 1.54, 32.50% in value stocks with a beta of 0.86, and 33.90% 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 = 0.93; expected return on the Market = 11.20%; expected return on T-bills = 1.80%; current stock Price = $9.14; expected stock price in one year = $13.58; expected dividend payment next year = $3.82. Calculate the

a) Required return for this stock

b) Expected return for this stock

Q5) The market risk premium for next period is 4.20% and the risk-free rate is 1.50%. Stock Z has a beta of 1.33 and an expected return of 13.30%. What is the:

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

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