1.You have developed data which give (1) the average annual returns of the market for the past five years and (2) similar annual returns information on Stocks A and B. Which of the possible answers best describes the historical beta for A and B? SHOW YOUR WORK.

Years Market index Stock A prices Stock B prices

2008 735 $16.79 $165

2009 1169 $37.47 $235

2010 1327 $39.03 $375

2011 1364 $25.40 $489

2012 1519 $45.16 $570

A.beta_A < 0; beta_B > 1.

B.beta_A < 1; beta_B < 1.

C.beta_A > 0; beta_B > 1.

D.beta_A > 1; beta_B < 1.

E.beta_A < 1;beta_B > 1.

2.What is the approximate expected coefficient of variation () of returns for a projected one-year project that is 50-50 chances to give +10% return as it is to provide a 5% loss?SHOW WORK.

A) 0

B) 0.2

C) 0.50

D) 1.00

E) 3.00

3.FISHERCorporation expects the stocks year-end dividend to be $2 a share. The stocks required rate of return is 15 percent and the stocks dividend is expected to grow at the constant rate of 5 percent forever. What is the expected price of the Waters Corporation stock six years from now? SHOW YOUR WORK. 4. The present value of the following cash flows with 11% discount rate is $3,428:

End of Cash

Year Flow

1 $755

2 755

3 755

4 ?

5 755

6 755

What is approximately the value cash inflow at the end of the 4th year?