Q1 Based on the following information, calculate the expected return and standard deviationfor the two stocks: State of Economy Probability of State of Economy Rate of Return If State Occurs StockA Stock B Recession.15.04-1.7Normal .55 .09 Boom .30 .17 Q2 You own a portfolio that has $2,650 invested in Stock A and $4,450 invested in Stock B. Ifthe expected returns on these stocks are 8 percent and 11 percent, respectively, what is theexpected return on the portfolio? Q3 You own a stock portfolio invested 20 percent in Stock Q, 30 percent in Stock R, 35 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .84, 1.17, 1.08, and 1.36, respectively. What is the portfolio beta? .12 .27
Q4 A stock has a beta of 1.15, the expected return on the market is 10.3 percent, and the risk-free rate is 3.8 percent. What must the expected return on this stock be? Q5 A stock has an expected return of 12.15 percent, its beta is 1.31, and the expected returnon the market is 10.2 percent. What must the risk-free rate be?