Given the following data for a stock: beta = 1.4; risk-free rate = 3%; market rate of return = 13%; and expected rate of return on the stock = 15%. Then the stock is:

		below the Security Market Line
		on the Security Market Line
		above the Security Market Line
		it cannot be determined

1. You own a portfolio of two stocks, O and Q. Stock O is valued at $4,000 and has an expected return of 10.5 percent. Stock Q has an expected return of 18.7 percent. What is the expected return on the portfolio if the portfolio total value is $5,000?

   		11.73 percent
   		10.92 percent
   		12.14 percent
   		13.03 percent

1. Cornel Co. has a beat of 1.4. If the risk-free rate is 3% and the market return is 12%, what is its cost of equity assume CAPM?

   		18.0%
   		16.5%
   		15.6%
   		17.6%