1. The risk premium for a security is based on which one of the following types of risk?
total
systematic
diversifiable
surprise
2. If the beta of COKE Co. is -0.23, risk-free rate is 3% and the market risk premium is 7%, calculate the expected rate of return for COKE stock:
2.08%
3.92%
4.61%
1.39%
3. You would like to invest $20,000 and have a portfolio expected return of 12 percent. You are considering two securities, A and B. A has an expected return of 18 percent and B has an expected return of 8 percent. How much should you invest in stock A if you invest the balance in stock B to achieve the 12 percent portfolio return?
$6,250
$5,500
$7,000
$8,000