You have a porttolio consisting solely of stock A and stock B. The portfolio has an expected return of 10.5 percent. Stock A has an expected return of 120 percent while stock. B is expected to return 7.0 percent. What is the weight of stock A in the portfolio? 60% 87% 70% 74% 81% Question 22 The MacMason Company has equal amounts of low-risk, average-risk, and high-risk projects. The firm's overall WACC is 12%. The CFO believes that this is the correct WACC for the company's average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects. The CEO disagrees. on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources. If the CEO's position is accepted, what is likely to happen over time? The company s overall WACC should decrease over time becase its stock price should be increasing. The CEO's recammindation would maximize the firm's intrinsic value. Things wili generally even out over time, and, therefore, the firm's risk should remain constant over time. The campany will take on too mazy high risk projects and rejcct too many low-risk projects. The company will take an too many lowrisk projects and reject too many high-risk proiects