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Homework 5C

Homework 5C

Q 1. King Farm Manufacturing Company’s common stock has a beta of 2.06. If the risk-free rate is 2.99 percent, and the market return is 7.81 percent, calculate the required return on King Farm Manufacturing’s common stock. Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box) 2. Try to determine the required rate of return on Tilden Woods Corporation’s common stock. The firm’s beta is 0.91. The rate on a 10-year Treasury bond is 3.06 percent, and the market risk premium is 8.60 percent. Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box) 3. You hold a portfolio with the following securities: Security Percent of portfolio Beta Stock A 45% 0.71 Stock B 18% 0.80 Stock C Please calculate it 2.44 Calculate the beta portfolio. Round the answers to two decimal places. 4. John invested the following amounts in three stocks: Security Investment Beta Stock A $903,202 2.25 Stock B $130,246 1.94 Stock C $140,804 0.65 Calculate the beta portfolio. Round the answers to two decimal places. 5.Jack holds a portfolio with the following securities: Security Investment Return Stock A 303,214 -1.3% Stock B 932,177 17.2% Stock C 780,867 7.5% Calculate the expected return of portfolio. Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box)

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1. 12.92 % 2. 10.89 % 3. 1.37 4. 2.02