QUESTION 1

a) 9.70% // 7.52% // 11.44% // 9.70% // 8.84%

b) 19.40% // 10.67% // 21.37% // 18.43% // 20.18%

c) 4.56% // 3.23% // 4.79% // 4.33% // 4.74%

d) 15.08% // 10.66% // 16.84% // 14.33% // 15.68%

QUESTION 2

REQUIREMENT 1

1) 18.39% // 20.89% // 30.42% // 33.19% // 12.66

REQUIREMENT 2

2) 0.014503 // 0.010003 // 0.006503 // 0.012003 // 0.014203

QUESTION 3

a) 124,081 // 197,485 // 195,428 // 205,714 // 213,943

b) 109,715 // 195,919 // 118,857 // 114,286 // 108,572

Consider the following information: Rate of Return if State Occurs State of Economy Recession Normal Boom Probability of State of Economy 0.10 0.50 0.40 Stock A 0.02 0.07 0.15 Stock B -0.17 0.15 0.34 Required: (a) Calculate the expected return for Stock A. (Do not round your intermediate calculations.) [(Click to select) (b) Calculate the expected return for Stock B. (Do not round your intermediate calculations.) (Click to select) v (c) Calculate the standard deviation for Stock A. (Do not round your intermediate calculations.) (Click to select) (d) Calculate the standard deviation for Stock B. (Do not round your intermediate calculations.) (Click to select) v Consider the following information: Rate of Return if State Occurs State of Economy Boom Bust Probability of State of Economy 0.64 0.36 Stock A 0.15 0.13 Stock B 0.27 0.05 Stock C 0.29 0.09 Requirement 1: What is the expected return on an equally weighted portfolio of these three stocks? (Do not round your intermediate calculations.) (Click to select) v Requirement 2: What is the variance of a portfolio invested 20 percent each in A and B and 60 percent in C? (Do not round your intermediate calculations.) (Click to select) You want to create a portfolio equally as risky as the market, and you have $800,000 to invest. Consider the following information: Asset Stock A Stock B Stock C Risk-free asset Investment $280,000 $200,000 Beta 0.90 1.30 1.40 Required: (a) What is the investment in Stock C? (Do not round your intermediate calculations.) (Click to select) v (b) What is the investment in risk-free asset? (Do not round your intermediate calculations.) (Click to select) v