$20$ points

There is a stock that has committed to pay dividends of $$1\mathrm{.}83$ for the next five years, what would the value of this stock be based on the dividends if the required return is $15\%?$

$212$ points

You are asked to evaluate a portfolio of five stocks. Stock A will receive an allocation of $38\%,$ is expected to get a return of $-20\%$ in recession, normally get $19\%,$ and $25\%$ during a boom. Stock B will receive an allocation of $20\mathrm{.}25\%,$ is expected to get a return of $18\%$ in recession, normally get $11\%,$ and $-6\%$ in a boom. Stock C will receive an allocation of $18\mathrm{.}5\%,$ is expected to get a return of $3\%$ in recession, normally get $8\%,$ and $11\%$ in a boom. Stock D will receive an allocation of $9\%$ in recession, normally get $4\%,$ and $2\%$ during a boom. Stock E will receive the balance of the allocation, is expected to get a return of $8\%$ during recession, $7\%$ normally, and $6\%$ during a boom.

What is the expected return of the portfolio? Please provide your answer as a decimal.

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$22$ points

Given the information in Pt $1,$ what is the variance of the portfolio?

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