Scenarios: Probabilities: Returns:

A 0.10 (0.10)

B 0.10 0.02

C 0.40 0.05

D 0.25 0.07

E 0.15 0.14

Problem 1: 5-Points: Calculate the expected return.

Problem 2: 5-Points: Calculate the standard deviation.

Problem 3: 4-Points: CAPM: If the risk-free rate is 0.02, the return of the market is 0.07, and the beta of the stock is 1.2, what is the return of the stock?

Problem 4: 4-Points: CAPM: If the risk-free rate is 0.02, the market risk premium is 0.07, and the beta of the stock is 1.2, what is the return of the stock?

Problem 5: 4-Points: CAPM: If the risk-free rate is 0.02, the return of the market is 0.07, and the beta of the stock is 1.2, what is the return of the stock?

Problem 6: 4-Points: CAPM: If the risk-free rate is 0.02, the return of the stock is 0.18, and the return of the market is 0.10, what is the beta of the stock?

Problem 7: 4-Points: CAPM: If the risk-free rate is 0.02, the return of the stock is 0.18, and the market-risk premium is 0.10, what is the beta of the stock?