Question $1$

$10pts$

Calculate the required rate of return for Mudd Enterprises assuming that investors expect a $3\mathrm{.}2\%$ rate of inflation in the future. The real risk$-$free rate is $2\%,$ and the market risk premium is $8\mathrm{.}8\%.$ Mudd has a beta of $1\mathrm{.}4,$ and its realized rate or return has averaged $12\%$ over the,past $10$ years.

Question $2$

$10pts$

Susi has $$293,320$ invested in a stock with a beta of $2\mathrm{.}3$ and andther $$404,218$ invested in a stock with a beta of $1\mathrm{.}7.$ If these are the only two investments in her portfolio, what is her portfolio's beta?

Question $3$

$10pts$

Assume that the risk$-$free rate is $4\mathrm{.}03\%$ and the required return on the market is $12\mathrm{.}26\%.$ What is the required rate of return on a stock with a beta of $1\mathrm{.}3?$

Required return $=\%$