problem1: Which of the following statements is true?

[A] When investors' required rate of return is less than the bond's coupon rate, then market value of the bond will be greater than par value.

[B] When investors' required rate of return is less than the bond's coupon rate, then the market value of the bond will be less than par value.

[C] When investors' required rate of return equals the bond's coupon rate, then the market value of the bond may be selling at par value.

[D] When investors' required rate of return exceeds the bond's coupon rate, then the market value of the bond will be greater than par value.

problem2: A stock with a beta greater than one has returns that are ___________ volatile than the market and a stock with a beta of less than one exhibits returns which are __________ volatile than those of the market portfolio.

[A] less, more

[B] less, less

[C] more, more

[D] more, less

problem3: You hold a portfolio with the following securities:

Percent (%)

Security         of Portfolio                 Beta            Return

A Corporation               20%                    1.35             14%

B Corporation               35%                     0.95             10%

C Corporation              45%                    0.75              8%

find out the expected return and beta for the portfolio. 

[A] 34.40%, 0.94

[B] 9.90%, 0.94

[C] 10.67%, 1.02

[D] 9.90%, 1.02