1. Given the following data for a stock: beta = 1.4; risk-free rate = 3%; market rate of return = 13%; and expected rate of return on the stock = 18%. Then the stock is: A)on the Security Market Line

B)above the Security Market Line

C)below the Security Market Line

D)it cannot be determined

2.You own a portfolio of two stocks, A and B. Stock A is valued at $2,000 and has an expected return of 10.5 percent. Stock B has an expected return of 14.7 percent. What is the expected return on the portfolio if the portfolio value is $5,000?

		A)12.03 percent
B)		11.73 percent
	C)	10.92 percent
	D)	13.02 percent

3.

A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on the security market line. A risk-free asset is yielding 3.2 percent. You want to create a portfolio that is comprised of the stock and the risk free and will have a portfolio beta of 0.8. What is the expected return on this portfolio?

	A)	11.20 percent
	B)	10.41 percent
	C)	12.33 percent
	D)	13.87 percent

4.

You would like to invest $20,000 and have a portfolio expected return of 10 percent. You are considering two securities, A and B. A has an expected return of 16 percent and B has an expected return of 8 percent. How much should you invest in stock A if you invest the balance in stock B to achieve the 10 percent portfolio return?

		A)$4,500
		B)$6,250
		C)$5,000
		D)$7,000