1. You have $133,000 in cash. You raise an additional $133,000 by selling short a stock with expected return of 9%. You invest the total amount of cash you nowhave in a stock with expected returns of 15%. What is the portfolio expected return? a.10% b.17% c.21% 8%
2. Your friend is selling his Dairy Queen franchised that he owns in a corporation that has 1 million shares outstanding. The corporation has Free Cash Flow to the Firm projected at $250,000 for next year. This cash flow amount is expected to grow by 2% at the end of year 2 and every year thereafter. The appropriate risk adjusted discount rate is 11%. What price per share would you suggest is fair? a. $2.78 b. $5.75 $c. $3.13 d.$2.09
3. You have invested 40% of your money in Microsoft and the balance in Tesla. Microsoft''s expected return is 11.03%. Tesla has an expected return oof 17.83%. The correlation between the stock returns is 0.33. What is the portfolio expected return? a. 8.88% b. 12.76% c. 15.11% d. 6.05%