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16. If you hold a...

16. If you hold a portfolio made up of the following stocks:

Investment Value Beta

Stock A $2000 1.5

Stock B $5000 1.2

Stock C $.8

What is the beta of the portfolio?

a) 1.14

b) 1.17

c) 1.32

d) can't be determined from information given

17. Your broker mailed you your year end statement. You have $25,000 invested in Dow Chemical, $18,000 tied up in GM, $36,000 in Microsoft stock, and $11,000 in Nike. The annualized return for these stocks is 16.5% for Dow, 12.0% for GM, 18.5% for Microsoft, and 15.3% for Nike. What is the return of your entire portfolio?

a) 9.00%

b) 16.25%

c) 18.55%

d) 15.60%

18. You are considering investing in a firm that has the following possible outcome:

Economic boom: probability of 25%; return of 25%

Economic growth: probability of 60%; return of 15%

Economic decline: probability of 15%; return of -5%

What is the expected rate of return on the investment?

a) 25.0%

b) 14.5%

c) 11.7%

d) 15.0%

19. Wilson Inc is expecting the following return on their stock and related probabilities. Calculate Wilson's expected return.

State Probability Return

Boom 30% 30%

Normal 70% 10%

a) 10%

b) 16%

c) 14%

d) 12%

20. If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return. What is the expected rate of return?

a) 13%

b) 14%

c) 15%

d) 12%

Investment Value Beta

Stock A $2000 1.5

Stock B $5000 1.2

Stock C $.8

What is the beta of the portfolio?

a) 1.14

b) 1.17

c) 1.32

d) can't be determined from information given

17. Your broker mailed you your year end statement. You have $25,000 invested in Dow Chemical, $18,000 tied up in GM, $36,000 in Microsoft stock, and $11,000 in Nike. The annualized return for these stocks is 16.5% for Dow, 12.0% for GM, 18.5% for Microsoft, and 15.3% for Nike. What is the return of your entire portfolio?

a) 9.00%

b) 16.25%

c) 18.55%

d) 15.60%

18. You are considering investing in a firm that has the following possible outcome:

Economic boom: probability of 25%; return of 25%

Economic growth: probability of 60%; return of 15%

Economic decline: probability of 15%; return of -5%

What is the expected rate of return on the investment?

a) 25.0%

b) 14.5%

c) 11.7%

d) 15.0%

19. Wilson Inc is expecting the following return on their stock and related probabilities. Calculate Wilson's expected return.

State Probability Return

Boom 30% 30%

Normal 70% 10%

a) 10%

b) 16%

c) 14%

d) 12%

20. If there is a 20% chance we will get a 16% return, a 30% chance of getting a 14% return, a 40% chance of getting a 12% return, and a 10% chance of getting an 8% return. What is the expected rate of return?

a) 13%

b) 14%

c) 15%

d) 12%

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