1. A geometrically increasing series of 15 end of year payments is deposited to fund an account. The first payment is $100,000, the geometric factor is 3%. The account will produce 30 consecutive annual payments of $500,000 starting at the end of year 16. Calculate the interest rate necessary to fund this account.
2. You have developed the following data on three stocks: Stock A has a standard deviation of .15 and a Beta of .79. Stock B has a standard deviation of .25 and a Beta of .61. Stock C has a standard deviation of .20 and a Beta of 1.29. If you are a risk minimizer, you should choose Stock _____ if it is to be held in isolation and Stock _____ if it is to be held as part of a well-diversified portfolio.