1. Assume you are interested in a stock that has a beta of .85. If the expected return of the market is 10 percent and the risk-free rate is 5%, what is the required return expected to be for the stock? What would the required return be if the beta was 1.80?

2. The past five monthly returns for K and Company are 6.05 percent, 5.93 percent, -.25 percent, 5.05 percent, and 9.05 percent. What is the average monthly return?

3. Analysts forecast Kroger’s growth rate to be 9.25 percent in the future. Their most recent dividend was $.65. What is the value of Kroger's stock when the required return is 12.50 percent? If the current price of Kroger were $25.00, would you purchase this stock? Explain your answer.