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Please answer ALL OF QUESTIONS 1 AND 2
1. Assume that the risk-free rate is 3.5% and the market risk premium is 8%.
a. What is the required return for the overall stock market? Round your answer to two decimal places. __________ %
b. What is the required rate of return on a stock with a beta of 2.4? Round your answer to two decimal places. __________ %
2. An individual has $50,000 invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 2.0. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places._______
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