You have a $2,000,000 portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.7.You are considering selling $100,000 worth of one stock with a beta of 0.8 and using the proceeds to purchase another stock with a beta of 1. What will the portfolio's new beta be after these transactions?

1. 1.9704
2. 2.3222
3. 1.7100
4. 2.1154
5. 1.3958

A stock is trading at $367.50 per share. The stock is expected to have a year-end dividend of $14.70 per share (D1 = $14.70), and it is expected to grow at some constant rate g throughout time. The stock's required rate of return is 11.0% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of g?

1. 3.00%
2. 1.50%
3. 8.00%
4. 7.00%
5. 6.00%