1 Consider the following information about expected returns for two securities, Ravenwood Consulting and Brody Enterprises Probability Ravenwood Brody Boom 40 13 5 2 Neutral 25 8 7 Bust 35 1 9 8 The expected return for a portfolio invested 65 in Ravenwood and 35 in Brody is 2 Based on the Capital Asset Pricing Model assuming the securities are correctly priced and given the following information, what is the return on the market Security Beta Expected Return Katmai Outfitters 1 25 0 142 Wrangell Adventures 0 82 0 098 3 Monroe McIntyre has estimated the expected return for Bruehl Industries to be 9 45 He notes the risk free rate is 1 30 and the return of the market is 10 60 Based on this information, he estimates Bruehl's beta to be A 0 77 B 0 88 C 1 02 4 Riley Stein estimates the expected returns for Cromarty LTD and Tindall Cos to be 12 3 and 5 2 respectively She wants to build a portfolio with an expected return of 9 50 The weight of Cromarty in the portfolio should be

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Question: 1. Consider the following information about expected returns for two securities, Ravenwood Consulting and Brody Enterprises. Probability Ravenwood Brody Boom 40% 13.5% -2% Neutral 25%

1. Consider the following information about expected returns for two securities, Ravenwood Consulting and Brody Enterprises.

	Probability	Ravenwood	Brody
Boom	40%	13.5%	-2%
Neutral	25%	8%	7%
Bust	35%	-1%	9.8%

The expected return for a portfolio invested 65% in Ravenwood and 35% in Brody is:

2. Based on the Capital Asset Pricing Model assuming the securities are correctly priced and given the following information, what is the return on the market?

Security	Beta	Expected Return
Katmai Outfitters	1.25	0.142
Wrangell Adventures	0.82	0.098

3. Monroe McIntyre has estimated the expected return for Bruehl Industries to be 9.45%. He notes the risk-free rate is 1.30% and the return of the market is 10.60%. Based on this information, he estimates Bruehl's beta to be:

	A.	0.77.
	B.	0.88.
	C.	1.02.

4. Riley Stein estimates the expected returns for Cromarty LTD and Tindall Cos to be 12.3% and 5.2% respectively. She wants to build a portfolio with an expected return of 9.50%. The weight of Cromarty in the portfolio should be:

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