Question 2 (1 point)

Stocks A and B have the following probability distributions of expected future returns:

Probability	A	B
0.1	(20%)	(46%)
0.2	7	0
0.4	15	15
0.2	23	30
0.1	47	50

Calculate the standard deviation of returns for Stock A.

Question 2 options:

	15.82%
	24.04%
	28.04%
	32.04%

Answer: ?writ

Question 3 (1 point)

Assume that the risk-free rate is 5.50% and the market risk premium is 4.75%.

What is the expected return for the overall stock market (r_M) ?

(Answer as a percent with 2 decimal places. For example, 10 percent should be entered as 10.00. Donot use the % sign.)

Your Answer: ?

Question 4 (1 point)

A stock has a required return of 9%, the risk-free rate is 6%, and the market risk premium is 5%.

What is the stock's beta?

(Express your answer to two decimal places. i.e. ten is entered as 10.00)

Your Answer: ?

Question 5 (1 point)

A stock has a beta of 1.6. Assume that the risk-free rate is 4.1%, and the market risk premium is 5%.

What is the stock's required rate of return?

(Answer as a percent with 2 decimal places. For example, 10 percent should be entered as 10.00. Donot use the % sign.)

Your Answer: ?

Question 6 (1 point)

Assume that the risk-free rate is 4.0% and the market risk premium is 7.0%.

What is the required rate of return on a stock with a beta of 1.6?

(Answer as a percent with 2 decimal places. For example, 10 percent should be entered as 10.00. Do not use the % sign.)

Your Answer: ?

Question 7 (1 point)

An individual has $33000 invested in Stock A with a beta of 0.7 and another $44000 invested in Stock B with a beta of 1.5.

If these are the only two investments in her portfolio, what is her portfolio's beta?

(Express your answer to two decimal places. i.e. a beta of one is entered as 1.00).

Your Answer: ?

Question 8 (1 point)

Suppose you are the money manager of a $4 million investment fund. The fund consists of four stocks with the following investments and betas:

Stock	Investment	Beta
A	$300,000	1.25
B	700,000	(0.75)
C	1,500,000	1.00
D	1,500,000	0.75

If the market's return in 12% and the risk-free rate is 5%, what is the fund's required rate of return (You must calculate the fund's beta, then its required rate of return).

Question 8 options:

	0.62
	0.88
	9.33%
	10.76%