1. You own a portfolio that has $2000.00 invested in stock A and $3500.00 invested in Stock B. Assume the expected returns on these stocks are 14 percent and 9 percent respectively. What is the expected return on the portfolio?
2. Northern Gas recently paid a $1.40 annual dividend on its common stock. This dividend increases at an average rate of 4.2 percent per year. The stock is currently selling for $42.10 a share. What is the market rate of return?
3. The risk-free rate is 5%. The expected return on the market is 10%. An equal-weighted portfolio of stocks A and B (meaning half of your money is in A and the other half in B) has an expected return of 11%. If stock A has beta=1.4, what must be the expected return of stock b?