Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock A B C D Dollar investment % $200,000 200,000 300,000 300,000 Beta 1.25 1.50 0.80 -0.25 Total investment $1,000,000 The market's required return is 9% and the risk-free rate is 5%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places.

Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, rƒ. The characteristics of two of the stocks are as follows:   Stock Expected Return Standard Deviation A 8% 55% B 4% 45% Correlation = −1       Required: a. Calculate the expected rate of return on this risk-free portfolio? (Hint: Can a particular stock portfolio be formed to create a “synthetic” risk-free asset?) (Round your answer to 2 decimal places.)   b. Could the equilibrium rƒ be greater than rate of return?

An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 2.40, and $50,000 in stock B which has a beta of 0.60. The return on the market is equal to 8% and treasure bonds have a yield of 3% (rRF). What’s the portfolio beta?     0.60     1.30     1.50     1.80  Using the information in Question 41, calculate the required rate of return on the investor’s portfolio     11.0%     15.0%     12.0%     10.5% A retail store is offering a diamond ring for sale for 36 months at $128 per month. The retail price of the ring is $4,000. What is the interest rate on this offer?     9.43%     11.20%     11.98%     12.11%

Currently the risk-free rate equals 5% and the expected return on the market portfolio equals 11%. An investment analyst provides you with the following information: Stock A  Beta 1.33   Expected Return 12% Stock B  Beta 0.7   Expected Return 10% (a) Calculate the reward-to-risk ratios of stock A, stock B and in market equilibrium. Are stock A and stock B overvalued, undervalued or fairly valued? Briefly explain. [within 150 words] (b) You want a portfolio with the same risk as the market. Calculate the weights of stock A and B respectively. (please show me steps and round the final answer to 2 decimal places, thanks)