1. You are considering buying a stock with a beta of 1.05. If the risk-free rate of return is 6.9 percent, and the market risk premium is 10.8 percent, what should the expected rate of return be for this stock?
2. An investor invests 40 percent of his wealth in a risky asset with an expected rate of return of 0.13 and a variance of 0.03; and 60 percent in a T-bill that pays 6 percent. What is his portfolio's expected return and standard deviation?