1. Use the following information to calculate your company's expected return

state           probability            return

boom                20%            .40

normal               60%             1.11

recession          20%             -.17

2. you have invested stocks j and m. from the following information determine your beta for your portfolio expected amount of

                return             investment              beta

stock j       .10                  120000                    1.2

stock m      .08                 300000                   .79

3. you have invested 30% of your portfolio into Jacob Inc. 405 into belle co. and 30% into Edward resources. what is the expected return of your portfolio if Jacob, belle and Edward have expected returns of .05, .19, .13 respectfully?

4. the covariance of the returns between willow stock and sky diamond stock is .0970. the variance of willow is .1290 and the variance of sky diamond is .1200. what is the correlation coefficient between the returns of the two stocks?

5. a project has the following cash flows

0         1          2            3

500    120      200       310

what is the projects NVP if the interest rate is 6%

6. Christopher electronics has bought new machinery for 5,000,000. the expected is to result in additional cash flows of 1210000over the next 7 years. what is the payback period for this project? there acceptance period is 5 years.