Question 1

1. The expected return on Apple stock 17%. Given than the yield on the 10-year US treasury bond is 2.0% and the return on the average return on the S&P 500 is 10%, how sensitive is the stock to changes in the market?
2. The expected return on Gaza stock is 26.8%. Given that the stock has a beta of 2.5 and average return on the market is 20%, what is the yield on the risk-free rate used in determining the expected return?
3. A stock market generates an excess of 500 pbs above the government bond with yield of 8%. If the stock on that market has a beta of 0.75, what return should holders of the stock expect?