Question 3

Stock A has the following returns for various states of the economy: State of the Economy Probability Stock A's Return Recession 5% -15% Below Average 25% -2% Average 40% 9% Above Average 25% 14% Boom 5% 15% Stock A's expected return is:

		6.60%
		7.35%
		8.35%
		8.85%

Question 8

The U.S. Treasury Bills are yielding 2.5%. What would be the expected return of a stock with beta of 1.91, if S&P 500 is expected to provide a return of 8.75%?

		13.3%.
		12.9%.
		8.2%.
		14.4%.

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