1. Give an example of a company that you expect would have a beta lower than 1, and one example of a company with a beta higher than 1. Explain each example.
2. Suppose you expect the stock market will do very well next year. Would you rather own stocks with high beta (?) or low beta? Explain.
3. Jane Smith has asked for a 30 year mortgage (repayable in monthly installments) to purchase a home in Oklahoma City, Oklahoma. The purchase price of the home is $150,000 of which $125,000 must be borrowed. If the APR on this loan is 8 percent, how much will Jane's total financing charges be?