1) Stock Y has a beta of 1.50 and the expected return of= 16%. Stock Z has the beta of 0.70 and the expected return of 11.5%. Market risk premium is 8%. What would risk-free rate have to be for two stocks to accurately price relative to each other?
2) A stock has beta of 0.9, expected return on te market is 10%, and the risk-free rate is 1%. What should expected return on this stock be?
3) You have= $10,000 to invest in a stock portfolio. Your choices are Stock A with the expected return of= 16% and Stock B with the expected return of= 11%. If your goal is to generate a portfolio with the expected return of 14.25%, how much money will you invest in stock A? In Stock B?