1.     Portfolio Weights An investor owns $13,000 of Adobe Systems stock, $17,000 of Dow Chemical, and $27,000 of Office Depot. What are the portfolio weights of each stock?

Adobe System = 0.23, Dow Chemical = 0.30, Office Depot = 0.47

Adobe System = 0.30, Dow Chemical = 0.23, Office Depot = 0.47

Adobe System = 0.27, Dow Chemical = 0.33, Office Depot = 0.40

Adobe System = 0.33, Dow Chemical = 0.33, Office Depot = 0.33

2. CAPM Required Return A company has a beta of 1.13. If the market return is expected to be 11.8 percent and the risk-free rate is 3.90 percent, what is the company’s required return?

17.23%

16.73%

13.33%

12.83%

3. Portfolio Beta You own $21,000 of City Steel stock that has a beta of 3.31. You also own $38,000 of Rent-N-Co (beta = 1.76) and $20,600 of Lincoln Corporation (beta = -.84). What is the beta of your portfolio?

4.23

4.89

1.50

1.00

4. Portfolio Return Year-to-date, Company O had earned a -7.7 percent return. During the same time period, Company V earned 9.95 percent and Company M earned 2.98 percent. If you have a portfolio made up of 35 percent Company O, 30 percent Company V, and 35 percent Company M, what is your portfolio return?

6.72%

1.33%

20.63%

5.23%

5. Average Return The past five monthly returns for PG Company are 1.35 percent, -1.7 percent, 4.35 percent, 3.8 percent, and 2.1 percent. What is the average monthly return?

2.67%

1.99%

13.33%

9.93%

6. Portfolio Return At the beginning of the month, you owned $7,000 of Company G, $9,500 of Company S, and $4,000 of Company N. The monthly returns for Company G, Company S, and Company N were 8.75 percent, -1.65 percent, and -.08 percent. What is your portfolio return?

7.02%

2.20%

2.34%

3.49%

7. Investment Return MedTech Corp stock was $50.95 per share at the end of last year. Since then, it paid a $0.45 per share dividend. The stock price is currently $62.50. If you owned 500 shares of MedTech, what was your percent return?

23.55%

8.83%

7.20%

19.20%

8. Portfolio Return Year-to-date, Company O had earned a -3.60 percent return. During the same time period, Company V earned 9.5 percent and Company M earned 7.75 percent. If you have a portfolio made up of 10 percent Company O, 20 percent Company V, and 70 percent Company M, what is your portfolio return?

20.85%

6.965%

7.685%

13.65%

9. Average Return The past five monthly returns for PG Company are 1.55 percent, -2.1 percent, 4.55 percent, 4.0 percent, and 2.3 percent. What is the average monthly return?

2.91%

10.33%

2.07%

14.53%

10. Required Return If the risk-free rate is 11.2 percent and the market risk premium is 6.4 percent, what is the required return for the market?

6.4%

4.8%

17.6%

11.2%