1. You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 0.57 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio?
2. Great Owl, Inc. has a bond outstanding that has a $1,000 par value and a market price of $1,065.04. The bond has 10 years remaining to maturity. Assuming an annual market interest rate of 9% and that the bond pays interest semiannually, calculate the ANNUAL coupon rate on the bond. (Round to nearest whole percentage)
3. Sudberry Inc just paid a $5.00 dividend. Due to a new product about to be released, analysts expect the company to grow at a supernormal rate of 15% for three years. After that it is expected to grow at a normal rate of 4% indefinitely. Stocks similar to Genestek are currently earning shareholders a return of 12%. The estimated selling price of the stock is: