You are analyzing a stock with a beta of 3. The risk-free rate of interest is 10 percent and the expected return on the market is 11 percent. What is the market risk premium?

a. 1%

b. 2%

c. 3%

d. 4%

e. none of the above

What is the beta of the following portfolio?

Stock E(R) Beta Investment

A -0.12 2.1 $280,000

B -0.08 0.9 $360,000

C 0.13 1.2 $250,000

a. 1.36

b. 1.40

c. 1.39

d. 1.41

e. none of the above