1. What is the expected rate of return on a stock that has a beta of 1.62 if the market risk premium is 9.4 percent and the risk-free rate is 4.7 percent?
15.92 percent
19.93 percent
18.07 percent
19.00 percent
2. You own a $35,000 portfolio that is invested in a risk-free security and Stock A. The beta of Stock A is 1.90 and the portfolio beta is 1.25. What is the amount of the investment in Stock A?
$20,386
$23,846
$25,586
$23,026
3. Stock A has a beta of 2.2 and an expected return of 13.2 percent. Stock B has a beta of 1.14 and an expected return of 14.70 percent. At what risk-free rate would these two stocks be correctly priced?
14.13 percent
15.01 percent
16.31 percent
15.70 percent