2. Tony Starks has the following Investments in his portfolio

Stock	Cost	Beta	Yearly Income	Value Today
A	15,000	1.6	200	18,000
B	12,000	1.2	150	16,000
C	13,000	0.9	100	15,000

Requirements: (15 marks)

1. Calculate the portfolio beta on the basis of the value today.

2. Calculate the percentage return of each asset in the portfolio for the year.

3. Calculate the percentage return of the portfolio on the basis of original cost, using income and gains during the year.

4. Assuming that Tonys fund manager provided him a data which says that during the time when the investment was made, the market return was expected to be 15% while the risk free rate was 2.5%, what is the expected rate of return for each stock on the basis of its beta and the expectations of market and risk-free returns.

3. Compute the value of a bond that has a BD 500 par value and 10% coupon interest rate. The issue pays interest annually and has 10 years remaining to its maturity date. A bonds of similar risk are currently earning a 12% rate of return.

4. Compute the value of a stock that paid cash dividends of BD 100 per share this period and is expected to grow at 10% per year for the next 2 years, after which they are expected to grow at 12% per year to infinity at a 5 required rate of return.