1. Assume the overall market has a risk premium of 8.3 percent and the risk-free rate is 3.6 percent. What is the risk premium for a stock that has a .87 beta and a standard deviation of 11.2 percent?
2. You wish to accumulate $100,000 through monthly payments of $700. If you can earn interest at an annual rate of 4% compounded monthly, how long (to the nearest year) will it take to accomplish your goal?
3. The Sleeping Flower Co. has earnings of $1.75 per share. The benchmark PE for the company from a comparable analysis is 18. What stock price would you consider appropriate? What if the benchmark PE were 21?