1) A stock's return has the following distribution:

Demand for the

Company's ProductsProbability of This

Demand OccurringRate of Return if This

Demand Occurs (%)Weak0.1-45%

Below average 0.2 -9

Average 0.4 8

Above average 0.2 25

Strong 0.1 70

1.0

Calculate the stock's expected return and standard deviation. Do not round intermediate calculations. Round your answers to two decimal places.

Expected return:%

Standard deviation:%

2)eBook

Expected Returns: Discrete Distribution

The market and Stock J have the following probability distributions:

Probability rM rJ

0.3 12% 19%

0.4 10 5

0.3 19 13

Calculate the expected rates of return for the market and Stock J. Round your answers to one decimal place.

1. Expected rate of return (Market):%
2. Expected rate of return (Stock J):%
3. Calculate the standard deviations for the market and Stock J. Do not round intermediate calculations. Round your answers to two decimal places.
4. Standard deviation (Market):%
5. Standard deviation (Stock J):%

3) Your retirement fund consists of a $7,000 investment in each of 15 different common stocks. The portfolio's beta is 1.50. Suppose you sell one of the stocks with a beta of 0.7 for $7,000 and use the proceeds to buy another stock whose beta is 1.9. Calculate your portfolio's new beta. Do not round intermediate calculations. Round your answer to two decimal places.