1. Suppose that the current risk free rate is 3% and the required rate of return on the market portfolio is 12%. Your stock has a beta of .65, so what is the required return on this stock based on its risk?
2. You are considering the purchase of a semi-annual bond, with 7 years remaining until maturity. It has a $1,000 face value, with a coupon rate of 6%, and currently sells for $894.37 in the market. Given this information, what is the annual interest rate (APR) on this bond?
3. Buzz Lightyear Aeronautical expects to pay a dividend of $3.00 next year, which they expect to grow at 2% per year. If the required return is 12%, what is the current price of this stock?