1. A stock has an expectd return of 11.8 percent, its beta is .93, and the risk-free rate is 5.9 percent.
What must the expected return on the market be? Market expected return ________%
2. You own a portfolio equally invested in a rik-free asset and two stocks. One of the stocks has a beta of 1.13 and the total portfolio is equally as risky as the market.
What must the beta be for the other stock in your portfolio Beta _______
3. A stock has an expected return of 12.9 percent and a beta of 1.15, and the expected return on the market is 11.9 percent.
What must the risk-free rate be? Risk-free rate_________%