Part A) Which one of the following is an example of diversifiable risk?
A. Income tax rates are revised by the federal government.
B. The unemployment rate drops to 4.5%
C. The Fed Lowers its discount rate
D. A firm shrinks its product market share
Part B) A company's stock has beta of 1.04, the risk- free rate is 4.25%, and the market risk premium is 5.50%. What is its required rate of return?
A. 4.25%
B. 9.97%
C. 11.95 %
D. 12.83%
Part C) An investor has a $100,000 stock portfolio $32,000 is invested in a stock with beta of 0.75 and the remainder is invested in stock with beta of 1.38. these are the only two investments in his portfolio what is his portfolio beta
A. 0.75
B. 1.18
C. 1.29
D. 1.38