Question 1 You turn on the news and find out the stock market has gone up 10%%. Based on the betas given in the table, by how much do you expect each of the following stocks to have gone up or down: (1) Starbucks, (2) Tiffany & Co., (3) Hershey, and (4) Exxon M Company Beta Industry Starbucks 1.04 Restaurants Tiffany and Co 1.64 Specialty Stores Hershey 0.19 Food Processing Exxon M 0.56 Oil and Gas Question 2 Suppose the market portfolio's excess return tends to increase by 30%% when the economy is strong and decline by 20% when the economy is weak. A type S firm has excess returns Increase by 45%% when the economy is strong and decrease by 30% when the economy is weak. A type I firm will also have excess returns of either 45%% or -30%%, but the type I firm's excess returns will depend only upon firm-specific events and will be completely independent of the state of the economy . What is the Beta for a Type I and Type S firms? Question 3 Use the following information to answer the question (s) below. Expecte Beta d Company Return Ford Motor Company 2.17 International Business Machines 0.73 Merck ? 0.90 Market Risk Premium Govt Bond Rate 4% Calculate the expected return from investing in each of the 3 companies . Question 4 Discuss the different components of risk and how it is measured