1. The expected rates of return for Stocks A, B, and C are .04, .10, and .12 respectively. The risk free rate is .03 and the market risk premium is .08. If you invest $3,000, $6,000, and $3,000 in Stocks A, B, and C respectively, what is the beta of the portfolio? Assume that the three stocks are priced in equilibrium.
a. .80
b. .75
c. .70
d. 1.0
2. CVC Inc.'s bonds mature in 7 years, have a par value of $1,000, and a coupon rate of 8% paid semi-annually. The market interest rate for the bonds is 9%. What is the expected price of the bond?
a. $969.96
b. $1,084.81
c. $944.30
d. $994.21
e. $948.89