Your first day as intern at Tri-Star Management Inc., the CEO asks you to analyze the following information pertaining to two common stock investments: Tech.com and Sams Grocery. You are told that a one-year Treasury Bill will have a rate of return of 5% over the next year. Also, information from an investment advising service lists the current beta for Tech.com as 1.68 and for Sams Grocery as 0.52. You are provided a series of questions to guide your analysis.

Question 1 Using the probabilistic approach, calculate the expected rate of return for Tech.com, Sams Grocery and the S&P 500 Index.

Question 2 Calculate the standard deviations in estimated rates of return for Tech.com, Sams Grocery and S&P 500.

Question 3 Which is a better measurement of risk for the common stock of Tech.com and Sams Grocerythe standard deviation you calculated or the beta?

Question 4 Based on the beta provided, what is the expected rate of return for Tech.com and Sams Grocery for the next year?

Question 5

If you form a two-stock portfolio by investing $30,000 in Tech.com and $70,000 in Sams Grocery, what is the portfolio beta and expected return?

Question 6

If you form a two-stock portfolio by investing $30,000 in Tech.com and $70,000 in Sams Grocery, what is the portfolio beta and expected rate of return?

Question 7

Which of these two-stock portfolios do