Beta	Average Return	Standard Deviation	Correlation
Disney	1.24	0.46%	0.0851	0.3687
T-Mobile	0.47	1.34%	0.0650

1. You can split your $85,000 anyway you want into your two-stock portfolio (i.e., except 100% in one-stock or 50%/50% split between the two). Decide how much of the $85,000 you want to invest in Stock 1 and put the remainder of the $85,000 in Stock 2. Calculate the weights for each stock in your portfolio [ 7 points]
2. What is the expected return of your portfolio? [ 5 points]
3. What is the standard deviation of your portfolio? [ 10 points]
4. What is the beta of your portfolio? [ 5 points]
5. Forget that you have calculated the expected return above. Assume all you know is each company's beta, and that the market risk premium is 5.50% and the risk-free rate is 1.26% (using the 3-month T-bill yield as the risk-free proxy). Using the Capital Asset Pricing Model (CAPM), what is the expected return for each company? [ 5 points]
6. How does the correlation coefficient of the two stocks impact the standard deviation of your portfolio? Would a positive or negative correlation drive the risk of your portfolio up, and why? [15 points]

Use the same two companies from above and answer the three questions below.

1. Make a table that includes the trailing and forward P/E Ratios for each of your two companies. [4 points]
2. How do the companies' PE Ratios compare to those of several prominent market indices? [6 points]
3. What are some factors discussed in the lectures that can drive a firm's P/E ratio? Summarize the results of your P/E table and provide a brief overview for what you think may be driving the differences between the two companies as well as between trailing and forward P/E ratio for a given company. [10points]