1. Suppose an investor wants to include Bartman Industries stock in his on her portfolio.

   Stocks A, B and C are currently in the portfolio and their betas are 0.769, 0.985 and 1.423,respectively. Calculate the new portfolios required return if it consists of 25 percent ofBartman, 15 percent of Stock A, 40 percent of Stock B and 20 percent of Stock C.

Bartman Industries' and Reynolds Incorporated's stock prices and dividends, along with the Wilshire 5000 Index, are shown below for the period 1996-2001. The Wilshire 5000 data are adjusted to include dividends. Year 2001 2000 1999 1998 1997 1996 Bartman Industries Stock Price Dividend $ 17.250 1.15 14.750 1.06 16.500 1.00 10.750 0.95 11.375 0.90 7.625 0.85 Reynolds Incorporated Stock Price Dividend $ 48.750 3.00 52.300 2.90 48.750 2.75 57.250 60.000 2.25 55.750 2.00 Wilshire 5000 Includes Divs. 11,663.98 8,785.70 8,679.98 6,434.03 5,602.28 4,705.97 2.50