a.During the period from 2011 through 2015 the annual returns on small U.S. stocks were -3.72 percent, 18.56 percent, 46.01 percent, 3.36 percent, and -3.40 percent, respectively.

What would a $1 investment, made at the beginning of 2011, have been worth at the end of 2015?( 3 decimal places,2.750) Value in 2015 $___________________What average annual return would have been earned on this investment?(2 decimal places, 52.75)Average annual return____________ percent per year

b.You must choose between investing in Stock A or Stock B. You have already used CAPM to calculate the rate of return you should expect to receive for each stock given each one's systematic risk and decided that the expected return for both exceeds that predicted by CAPM by the same amount. In other words, both are equally attractive investments for a diversified investor. However, since you are still in school and do not have a lot of money, your investment portfolio is not diversified. You have decided to invest in the stock that has the highest expected return per unit of total risk.

If the expected return and standard deviation of returns for Stock A are 12 percent and 25 percent, respectively, and the expected return and standard deviation of returns for Stock B are 18 percent and 45 percent, respectively, which should you choose? Assume that the risk-free rate is 9 percent.(3 decimal places,52.750)Highest expected return per unit of risk stock A____________ stock b ______________You should invest inStock B Stock because it has thehighestexpected return per unit of risk.

c.Sandhill, Inc., stock has a beta of 1.50. If the expected market return is 17.0 percent and the risk-free rate is 9.0 percent, what does CAPM indicate the appropriate expected return for Sandhill stock is?(2 decimal places, e.g. 52.75) Expected return for Sandhill stock_______________%