Exhibit 8.2

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

You expect the risk-free rate (RFR) to be 3 percent and the market return to be 8 percent. You also have the following information about three stocks.

Current Expected Expected

Stock Beta Price Price Dividend

X 1.25 $20 $23 $1.25

Y 1.50 $27 $29 $0.25

Z 0.90 $35 $38 $1.00

13. Refer to Exhibit 8.2. What are the expected (required) rates of return for the three stocks (in the order X, Y, Z)?

a. 16.50%, 5.50%, 22.00%

b. 9.25%, 10.5%, 7.5%

c. 21.25%, 8.33%, 11.43%

d. 6.20%, 2.20%, 8.20%

e. 15.00%, 3.50%, 7.30%

14. Refer to Exhibit 8.2. What are the estimated rates of return for the three stocks (in the order X, Y, Z)?

a. 21.25%, 8.33%, 11.43%

b. 6.20%, 2.20%, 8.20%

c. 16.50%, 5.50%, 22.00%

d. 9.25%, 10.5%, 7.5%

e. 15.00%, 3.50%, 7.30%

15. Refer to Exhibit 8.2. What is your investment strategy concerning the three stocks?

a. Buy X and Y, sell Z.

b. Sell X, Y and Z.

c. Sell X and Z, buy Y.

d. Buy X, Y and Z.

e. Buy X and Z, sell Y.

All these questions, thanks!!