Question

# 1. Your investment club has only two stocks in its portfolio. \$30,000 is invested in a...

1. Your investment club has only two stocks in its portfolio. \$30,000 is invested in a stock with a beta of 0.5, and \$45,000 is invested in a stock with a beta of 1.8. What is the portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

2. AA Corporation's stock has a beta of 0.8. The risk-free rate is 3%, and the expected return on the market is 11%. What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to one decimal place.

3. Suppose that the risk-free rate is 4% and that the market risk premium is 6%. Round your answers to one decimal place.

1. What is the required return on the market?

%

1. What is the required return on a stock with a beta of 1.0?

%

1. What is the required return on a stock with a beta of 1.3?.

%

4. An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 8%, the return on the SMB portfolio (rSMB) is 2.4%, and the return on the HML portfolio (rHML) is 5.0%. If ai = 0, bi = 1.2, ci = -0.4, and di = 1.3, what is the stock's predicted return? Do not round intermediate calculations. Round your answer to two decimal places.

In the fourth question the risk free rate is missing, Im posting remaining three and the formula for the fourth. Simply substitute them.

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