1.The risk-free return is 4 percent. The required return on a stock whose beta is 1.1 is 14 percent. What is the expected return on the market portfolio? (4 marks)

2. The risk-free return is 6 percent and the return on the market portfolio is 14 percent. Stock X's beta is 1.4; its dividends and earnings are expected to grow at a constant rate of 10 percent. If the previous dividend per share of stock X was RM.2.50, what should be the intrinsic value per share of stock X? (4 marks)
3. Compute the value of a bond that pays semi-annual interest at the rate of 7% per year. The face value of the bond is RM1,000 and will mature in 10 years. (6 marks)
4. Compute the yield to maturity of the above-mentioned bond (6 marks)

Answer rating: 100% (QA)

1 To calculate the expected return on the market portfolio we can use the Capital Asset Pricing Model CAPM formula Expected Return on Stock RiskFree R... View the full answer