Question: Please round to 4 decimal places Q2) There is a 13.70% probability of an average economy and a 86.30% probability of an above average economy.

 Please round to 4 decimal places Q2) There is a 13.70%

Please round to 4 decimal places

Q2) There is a 13.70% probability of an average economy and a 86.30% probability of an above average economy. You invest 35.80% of your money in Stock S and 64.20% of your money in Stock T. In an average economy the expected returns for Stock S and Stock T are 10.80% and 13.50%, respectively. In an above average economy the the expected returns for Stock S and T are 13.60% and 10.10%, respectively. What is the expected return for this two stock portfolio? (2 points) Q3) You are invested 21.40% in growth stocks with a beta of 1.72, 11.50% in value stocks with a beta of 0.80, and 67.10% in the market portfolio. What is the beta of your portfolio? (1 point) Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 0.81; expected return on the Market = 12.60%; expected return on T-bills = 4.30%; current stock Price = $9.08; expected stock price in one year = $11.15; expected dividend payment next year = $1.79. Calculate the a) Required return for this stock (1 point): b) Expected return for this stock (1 point): Q5) The market risk premium for next period is 7.30% and the risk-free rate is 1.80%. Stock Z has a beta of 0.98 and an expected return of 10.40%. What is the: a) Market's reward-to-risk ratio? (1 point): b) Stock Z's reward-to-risk ratio (1 point)

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