What is the amount of the risk premium on zelo stock

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Reference no: EM132032508

1) Zelo, inc. Stock has beta of 1.5. The risk free rate of return is 5% and the market rate of return is 10%. What is the amount of the risk Premium on zelo Stock?

A) 5%

B) 10%

C) 7.5%

D) 12.5%

2) You want your portfolio beta to be 1.20. Currently, your portfolio consists of $100 ivnested in stock A with a beta of 1.4 and $300 in stock B with a beta of .6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a risk free asset. How much should you invest in the risk-free asset?

A) 320

B) 200

C) 0

D) 560

3) which of the following statements is incorrect convering the equity component of the WACC?

A) there is a tax sheild such as with debt.

B) Preferred equity has a separate component

C) market values should be used in the calculations

D) The value of retained earning is not included.

TIA and please explain or show work.

Reference no: EM132032508

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