Please see attached document. This has to be done in an excel format.

This is review for a mid term.

Thank you.

Risk, Return, and the Capital Asset Pricing Model

As a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the following information pertaining to two common stock investments, Tech.com Incorporated and Sam's Grocery Corporation. You are told that a one-year Treasury Bill will have a rate of return of 5% over the next year. Also, information from an investment advising service lists the current beta for Tech.com as 1.68 and for Sam's Grocery as 0.52. You are provided a series of questions to guide your analysis.

Estimated Rate of Return .

Economy Probability Tech.com Sam's Grocery S&P 500

Recession 30% -20% 5% - 4%

Average 20% 15% 6% 11%

Expansion 35% 30% 8% 17%

Boom 15% 50% 10% 27%

Assignment

1. Calculate the expected rate of return for Tech.com Incorporated, Sam's Grocery Corporation, and the S&P 500 Index.

2. Calculate the standard deviations in estimated rates of return for Tech.com Incorporated, Sam's Grocery Corporation, and the S&P 500 Index.

3. Which is a better measure of risk for the common stock of Tech.com Incorporated and Sam's Grocery Corporation-the standard deviation you calculated in Question 2 or the beta?

4. Based on the beta provided, what is the expected rate of return for Tech.com Incorporated and Sam's Grocery Corporation for the next year?

5. If you form a two-stock portfolio by investing $30,000 in Tech.com Incorporated and $70,000 in Sam's Grocery Corporation, what is the portfolio beta and expected rate of return?

6. If you form a two-stock portfolio by investing $70,000 in Tech.com Incorporated and $30,000 in Sam's Grocery Corporation, what is the portfolio beta and expected rate of return?

7. Which of these two-stock portfolios do you prefer? Why?

Risk, Return, and the Capital Asset Pricing Model

As a first day intern at Tri-Star Management Incorporated the CEO asks

you to analyze the following information pertaining to two common stock

investments, Tech.com Incorporated and Samâs Grocery Corporation. You

are told that a one-year Treasury Bill will have a rate of return of 5%

over the next year. Also, information from an investment advising

service lists the current beta for Tech.com as 1.68 and for Samâs

Grocery as 0.52. You are provided a series of questions to guide your

analysis.

Estimated Rate of Return

.

Economy Probability Tech.com Samâs Grocery S&P 500

Recession 30% â20% 5% â 4%

Average 20% 15% 6% 11%

Expansion 35% 30% 8% 17%

Boom 15% 50% 10% 27%

Assignment

1. Calculate the expected rate of return for Tech.com Incorporated,

Samâs Grocery Corporation, and the S&P 500 Index.

2. Calculate the standard deviations in estimated rates of return for

Tech.com Incorporated, Samâs Grocery Corporation, and the S&P 500

Index.

3. Which is a better measure of risk for the common stock of Tech.com

Incorporated and Samâs Grocery Corporationâthe standard deviation

you calculated in Question 2 or the beta?

4. Based on the beta provided, what is the expected rate of return for

Tech.com Incorporated and Samâs Grocery Corporation for the next year?

5. If you form a two-stock portfolio by investing $30,000 in Tech.com

Incorporated and $70,000 in Samâs Grocery Corporation, what is the

portfolio beta and expected rate of return?

6. If you form a two-stock portfolio by investing $70,000 in Tech.com

Incorporated and $30,000 in Samâs Grocery Corporation, what is the

portfolio beta and expected rate of return?

7. Which of these two-stock portfolios do you prefer? Why?

This is review for a mid term.

Thank you.

Risk, Return, and the Capital Asset Pricing Model

As a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the following information pertaining to two common stock investments, Tech.com Incorporated and Sam's Grocery Corporation. You are told that a one-year Treasury Bill will have a rate of return of 5% over the next year. Also, information from an investment advising service lists the current beta for Tech.com as 1.68 and for Sam's Grocery as 0.52. You are provided a series of questions to guide your analysis.

Estimated Rate of Return .

Economy Probability Tech.com Sam's Grocery S&P 500

Recession 30% -20% 5% - 4%

Average 20% 15% 6% 11%

Expansion 35% 30% 8% 17%

Boom 15% 50% 10% 27%

Assignment

1. Calculate the expected rate of return for Tech.com Incorporated, Sam's Grocery Corporation, and the S&P 500 Index.

2. Calculate the standard deviations in estimated rates of return for Tech.com Incorporated, Sam's Grocery Corporation, and the S&P 500 Index.

3. Which is a better measure of risk for the common stock of Tech.com Incorporated and Sam's Grocery Corporation-the standard deviation you calculated in Question 2 or the beta?

4. Based on the beta provided, what is the expected rate of return for Tech.com Incorporated and Sam's Grocery Corporation for the next year?

5. If you form a two-stock portfolio by investing $30,000 in Tech.com Incorporated and $70,000 in Sam's Grocery Corporation, what is the portfolio beta and expected rate of return?

6. If you form a two-stock portfolio by investing $70,000 in Tech.com Incorporated and $30,000 in Sam's Grocery Corporation, what is the portfolio beta and expected rate of return?

7. Which of these two-stock portfolios do you prefer? Why?

Risk, Return, and the Capital Asset Pricing Model

As a first day intern at Tri-Star Management Incorporated the CEO asks

you to analyze the following information pertaining to two common stock

investments, Tech.com Incorporated and Samâs Grocery Corporation. You

are told that a one-year Treasury Bill will have a rate of return of 5%

over the next year. Also, information from an investment advising

service lists the current beta for Tech.com as 1.68 and for Samâs

Grocery as 0.52. You are provided a series of questions to guide your

analysis.

Estimated Rate of Return

.

Economy Probability Tech.com Samâs Grocery S&P 500

Recession 30% â20% 5% â 4%

Average 20% 15% 6% 11%

Expansion 35% 30% 8% 17%

Boom 15% 50% 10% 27%

Assignment

1. Calculate the expected rate of return for Tech.com Incorporated,

Samâs Grocery Corporation, and the S&P 500 Index.

2. Calculate the standard deviations in estimated rates of return for

Tech.com Incorporated, Samâs Grocery Corporation, and the S&P 500

Index.

3. Which is a better measure of risk for the common stock of Tech.com

Incorporated and Samâs Grocery Corporationâthe standard deviation

you calculated in Question 2 or the beta?

4. Based on the beta provided, what is the expected rate of return for

Tech.com Incorporated and Samâs Grocery Corporation for the next year?

5. If you form a two-stock portfolio by investing $30,000 in Tech.com

Incorporated and $70,000 in Samâs Grocery Corporation, what is the

portfolio beta and expected rate of return?

6. If you form a two-stock portfolio by investing $70,000 in Tech.com

Incorporated and $30,000 in Samâs Grocery Corporation, what is the

portfolio beta and expected rate of return?

7. Which of these two-stock portfolios do you prefer? Why?