1.You project that a stock will return 15% in a good economy, and lose 2% in a bad one.If there is a 50/50 chance of a good or bad economy,

What is the expected return

What is the variance of returns

What is the standard deviation of returns?

2.A stock has returned 8, 10, and 25% over the last three years.

What is the expected return?

What is the variance of returns?

What is the standard deviation of returns?

3.You estimate the beta of a stock to be 2.0.The market is expect to return 10% next year, and the risk free rate is 2%.What is the expected return of the stock?

4.Under the CAPM, why does stock-specific (idiosyncratic, diversifiable) risk not matter?