Question: Please answer the following - 1a. Java Coffee's stock has a beta of 1.74 and an expected return of 20.84 percent. The risk-free rate of

Please answer the following -

1a. Java Coffee's stock has a beta of 1.74 and an expected return of 20.84 percent. The risk-free rate of return is 2.75 percent. What is the expected market risk premium?

a. 13.15 percent

b. 11.19 percent

c. 9.67 percent

d. 12.95 percent

e. 10.40 percent

1b. You have a $1,100 portfolio which is invested in stocks A and B plus a risk-free asset. $200 is invested in stock A. Stock A has a beta of 1.13 and stock B has a beta of 2.73. How much needs to be invested in stock B if you want a portfolio beta of 1.68?

a. $463

b. $634

c. $594

d. $401

e. $1,008

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