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Category > Business & Finance Posted 18 Jun 2017 My Price 12.00

If the economy booms, RTF, Inc. stock is expected

If the economy booms, RTF, Inc. stock is expected to return 13 percent. If the economy goes into a recessionary period, then RTF is expected to only return 3 percent. The probability of a boom is 81 percent while the probability of a recession is 19 percent. What is the variance of the returns on RTF, Inc. stock?

a. .001539

b. .001247

c. .000954

d. .055500

e. .039230

2. You own the following portfolio of stocks. What is the portfolio weight of stock C?

Stock Number of Shares Price per Share
A 120 $40
B 600 $36
C 400 $60
D 280 $59

a. 35.86 percent

b. 24.69 percent

c. 64.14 percent

d. 32.28 percent

e. 56.97 percent

3

The risk-free rate of return is 4.6 percent and the market risk premium is 14 percent. What is the expected rate of return on a stock with a beta of 1.7?

a. 14.20 percent

b. 21.82 percent

c. 23.80 percent

d. 28.40 percent

e. 10.91 percent

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Status NEW Posted 18 Jun 2017 10:06 AM My Price 12.00

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