Answer each individual question.

1

Company A has a risk percentage of 55% and a return of 14%. Company B has a risk percentage of 3% and a return of 14%. Compute the Coefficient of Variation for each company. Which company is riskier? Why?

2

Your investment has a beginning value of $1,000,000. The expected ending value is $2,100,000. Compute the expected rate of return.

3

Describe the difference between Firm Specific Risk and Market Risk

4

The Risk-Free Rate of Return is 4%. The Market Rate of Return is 10%. The Beta Coefficient is 0.2. Using the Capital Asset Pricing Model, compute the Required Rate of Return.

5.

Your company has 1,000,000 shares of $5 par common stock outstanding. It declares a 5 for 1 stock split. Show the effects of this stock split.

6

Your company has 2,000,000 shares of $0.20 par common stock. It declares a 20 for 1 reverse split. Show the effects of the reverse split