Q1) Assume a hedge fund manager earns 0.5% per trading day. There are 250 trading days in certain year. Suppose she permits you to reinvest in her fund 0.5% you earn every day, determine the annual return on $300 invested in her fund?
Q2) Stocks A, B, C and D have betas of 1.5, 0.4, 0.9 and 1.7 respectively. Compute the beta of equally weighted portfolio of A, B and C?
Q3) Consider CAPM. Risk-free rate is 6% and expected return on market is 18%. Compute the expected return on a stock with a beta of 1.3?
Q4) Suppose you bought 200 shares of XYZ common stock on margin at $80 per share from the broker. If initial margin is 60%, maximum amount you borrowed from broker is __________.