1)

A. Given the following information, determine the beta coefficient for Stock L that is consistent with equilibrium: = 10.5%; r_RF = 5.5%; r_M = 9.5%. Round your answer to two decimal places.

B.

Stock R has a beta of 1.5, Stock S has a beta of 0.75, the required return on an average stock is 11%, and the risk-free rate of return is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.

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C.

Beale Manufacturing Company has a beta of 1.1, and Foley Industries has a beta of 0.30. The required return on an index fund that holds the entire stock market is 12%. The risk-free rate of interest is 4.5%. By how much does Beale's required return exceed Foley's required return? Do not round intermediate calculations. Round your answer to two decimal places.

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D.

You have been managing a $5 million portfolio that has a beta of 1.15 and a required rate of return of 7.175%. The current risk-free rate is 2%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.35, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.

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