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1.Stock A has an expected return of 7%, a standard deviation of expected returns of 35%, a correlation coefficient with the market of -0.3, and a beta coefficient of -0.5. Stock B has an expected return of 12%, a standard deviation of returns of 10%, a 0.7 correlation with the market, and a beta coefficient of 1.0. Which security is riskier? Why?

2.A mutual fund manager has a $20 million portfolio with a beta of 1.5. The risk-free rate is 3.5%, and the market risk premium is 6.5%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the funds required return to be 14%. What should be the average beta of the new stocks added to the portfolio?

3.A stock has a required return of 10%, the risk-free rate is 4%, and the market risk premium is 4%. What is the stocks beta?