Problem 1. You own a stock portfolio invested 25% in stock Q, 20% in stock R, 15% in stock S, and 40% in stock T. The betas for these stocks are .84, 1.17, 1.11, and 1.36 respectively. What is the portfolio beta?
Problem 2. (Using CAPM) A stock has a beta of 1.05, the expected return on the market is 11 % and the risk-free rate is 5.2 %. What must the expected return on the stock be?
Problem 3. (Using CAPM) A stock has an expected return of 10.2%, the risk-free rate is 4.5%, and the market risk premium is 8.5%. What must the beta of this stock be?
Problem 4. (Using CAPM) A stock has an expected return of 13.5%, its beta is 1.17 and the risk-free rate is 5.5%. What must the expected return on the market be?
Problem 5. (Using CAPM) A stock has an expected return of 14%, its beta is 1.45, and the expected return on the market is 11.5%. What must the risk-free rate be?