Assume that the three stocks are priced in equilibrium

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1. The expected rates of return for Stocks A, B, and C are .04, .10, and .12 respectively. The risk free rate is .03 and the market risk premium is .08. If you invest $3,000, $6,000, and $3,000 in Stocks A, B, and C respectively, what is the beta of the portfolio? Assume that the three stocks are priced in equilibrium.

a. .80

b. .75

c. .70

d. 1.0

2. CVC Inc.'s bonds mature in 7 years, have a par value of $1,000, and a coupon rate of 8% paid semi-annually. The market interest rate for the bonds is 9%. What is the expected price of the bond?

a. $969.96

b. $1,084.81

c. $944.30

d. $994.21

e. $948.89

Reference no: EM132005993

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