Analyses are included in the capital budgeting process

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1. A stock has a beta of 1.94, the expected return on the market is 0.06, and the risk-free rate is 0.05. What must the expected return on this stock be? Enter the answer with 4 decimals (e.g. 0.1234).

2. Why do organizations need a separate capital budget and what special types of analyses are included in the capital budgeting process?

3. You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 0.63, 0.59, 1.03, and 2.49, respectively. What is the portfolio beta? Enter the answer with 4 decimals (e.g. 1.1234)

Reference no: EM132050400

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