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Rate of Return This Demand Occurs Demand for the Company's Products Weak Below average Average Above average Strong Probability of this Demand Occurring 01 02

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Rate of Return This Demand Occurs Demand for the Company's Products Weak Below average Average Above average Strong Probability of this Demand Occurring 01 02 0.4 02 (50 (5) 16 25 60 0.1 10 A stock's returns have the following distribution as attached. Calculate the stock's Coefficient of Variation (CV). At least four decimal places are needed for your calculation) A) 2.00 B) 2.34 OC) 2.73 D) 2.18 E) 2.55 A stock has a required return of 11%, the risk-free rate is 7%, and the market risk premium is 4%. What is the stock's beta? OA) 1.0 B) 1.7 OC) 1.9 D) 1.5 E) 1.3 You have been managing a $5 million portfolio that has a beta of 1.25 and a required rate of return of 12%. The current risk-free rate is 5.25%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.00, what will be the required return on your $5.5 million portfolio? (At least two decimal places are needed for your calculation) A) 11.88% B) 12.78% C) 13.24% OD) 12.24% E) 11.38%

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