## finance-A stock has an expected return of 16.5 percent

1.A stock has an expected return of 16.5 percent, the risk-free

rate is 4.2 percent, and the market risk premium is 8.6 percent. What must

the beta of this stock be?(Round your answer

to 2 decimal places.)

2. A stock has an expected return of 14.8 percent, its beta is

.80, and the risk-free rate is 3.1 percent. What must the expected return on

the market be?(Round your answer to 2

decimal places. Omit the “%” sign in your response.)

3.A stock has an expected return of 14.5 percent, a beta of 1.80,

and the expected return on the market is 10.2 percent. What must the

risk-free rate be?(Round your answer to 2

decimal places. Omit the “%” sign in your response.)

4.A stock has a beta of 1.4 and an expected return of 13.3

percent. If the risk-free rate is 4.4 percent, what is the market risk

premium?(Round

your answer to 2 decimal places. Omit the “%” sign in your

response.)

5.You own a stock portfolio invested 20 percent in Stock Q, 35

percent in Stock R, 35 percent in Stock S, and 10 percent in Stock T. The

betas for these four stocks are 1.2, 0.7, 1.3, and 0.9, respectively. What is

the portfolio beta?(Round your answer to 3

decimal places.)

6.You own a portfolio equally invested in a risk-free asset and

two stocks. If one of the stocks has a beta of 1.75, and the total portfolio

is exactly as risky as the market, what must the beta be for the other stock

in your portfolio?(Round your answer to 2

decimal places.)

7.A share of stock sells for $42 today. The beta of the stock is

1.4, and the expected return on the market is 14 percent. The stock is

expected to pay a dividend of $1.50 in one year. If the risk-free rate is 4.1

percent, what should the share price be in one year?(Round your answer to 2 decimal places. Omit the “$”

sign in your response.)

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9.Asset W has an expected return of 13 percent and a beta of 1.3.

If the risk-free rate is 3.1 percent, what is the market risk premium?(Round your answer to 2 decimal places.Omit the “%” sign in

your response.)

10.Stock Y has a beta of 1.15 and an expected return of 14.2

percent. Stock Z has a beta of 0.7 and an expected return of 10 percent. What

would the risk-free rate have to be for the two stocks to be correctly priced

relative to each other?(Round your answer to

2 decimal places.Omit

the “%” sign in your response.)

11.You have a $1,000 portfolio

which is invested in stocks A and B plus a risk-free asset. $300 is invested

in stock A. Stock A has a beta of 1.3 and stock B has a beta of 0.6. How much

needs to be invested in stock B if you want a portfolio beta of 0.8?

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13. A stock has a beta of 1.5 and an

expected return of 15 percent. If the risk-free rate is 5.2 percent, what is

the percentage market risk premium?

14. A share of stock sells for $54

today. The beta of the stock is 1.3, and the expected return on the market is

10 percent. The stock is expected to pay a dividend of $1 in one year. If the

risk-free rate is 4.8 percent, what will the share price be in one year?

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