1. Company A has a beta of 2.77. Company B has a beta of .73. Company C has a beta of .90. The risk free rate is 6% and the market risk premium is 4%. What is the expected return of investing in Company A? Show your work.
2. Your stock portfolio consists of only two stocks. You have $30,000 in Company A and $35,000 in Company B. Company A has an actual return of -8% and Company B has a return of 12%. What is the return on your portfolio?
3. A company has a capital structure of 50% debt and 50% equity. The YTM on the company's bonds is 8%, and the company's effective tax rate is 40%. The cost of equity is 13%. What is the company's WACC?