Suppose you held a diversified portfolio consisting of 10 different common stocks, investing $500 in each stock. The portfolios beta is 1.9. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 0.8 for $500 and use the proceeds to buy another stock with a beta of 1.25. What would your portfolios new beta be? *

a) 1.074

b) 2.025

c) 3.865

d) 4.2

e) None of the above

Assume that you purchase a 6-year, 8% savings certificate for $1,000. If interest is compounded annually, what will be the value of the certificate when it matures? *

a. $630.17

b. $1,469.33

c. $1,677.10

d. $1,586.87

e. None of the above

How much would you be willing to pay for an investment that would return $800 each year at the end of each of the next 6 years? Assume an annual interest rate of 5%. *

a. $5,441.53

b. $4,800

c. $3,369.89

d. $4,060.55

e. None of the above

Tata Corp. is experiencing rapid growth. Dividends are expected to grow at 25 percent per year during the next three years, 15 percent over the following year, and then 8 percent per year indefinitely. The required return on this stock is 13 percent, and the stock currently sells for $76 per share. What is the projected dividend per share for the coming year? *

a. $2.18

b. $3.55

c. $0.58

d. $2.73

e. None of the above

Antiques R Us is a mature manufacturing firm. The company just paid a $10.46 dividend, but management expects to reduce the payout by 4 percent per year indefinitely. If you require an 11.5 percent return on this stock, what will you pay for a share today? *

a. $61.56

b. $74.71

c. $94.05

d. $64.78

e. None of the above