Suppose that the Treasury bill rate were 6% rather than 4%. Assume that the expected return on the market stays at 10%. Use the betas in Table 8.2 (p. 193) - provided below.

a. Calculate the expected return from Dell.
b. Find the highest expected return that is offered by one of these stocks.
c. Find the lowest expected return that is offered by one of these stocks.
d. Would Ford offer a higher or lower expected return if the interest rate were 6% rather than 4%? Assume that the expected market return stays at 10%.
e. Would Exxon Mobil offer a higher or lower expected return if the interest rate were 8%?

1. CalculatingReturns. Suppose a stock had an initial price of $84 per share, paid a dividend of $1.40 per share during the year, and had an ending share price of $96. Compute the percentage of total return.
2. Holding Period Returns. A stock has had returns of -17.62 percent, 15.38 percent, 10.95 percent, 26.83 percent, and

9. CalculatingReturns and Variability You've observed the following returns on Mary Ann Data Corporation's stock over the past five years: 216 percent, 21 percent, 4 percent, 16 percent, and 19 percent.
a. What was the arithmetic average return on Mary Ann's stock over this five-year period?
b. What was the variance of Mary A

Calculate theexpected return and standard deviation of returns for asset A are (See below.)
Possible Outcomes Probability Returns (%)
Pessimistic 0.25 5
Most likely 0.55 10
Optimistic 0.20 13

An investment of $20 in Stock A is expected to pay no dividends and have value of $24 in 1 year. An investment of $70 in Stock B is expected to generate a $2.50 dividend next year and price of its stock is expected to be $78.
1) What are theexpectedreturns
2) If the required return is 10%, which
stock(s) should be profit

1). Consider the following data for two risk factors (1 and 2) and two securities (J and L).
rf = 0.05 bJ1 = 0.80
rm1 = 0.02 bJ2 = 1.40
rm2 = 0.04 bL1 = 1.60
bL2 = 2.25
a. Compute theexpectedreturns for both securities.
b. Suppose that security J is currently priced a

Financial analysts believe that there are four equally likely states of the economy: depression, recession, normal, and boom times. Thereturns on the Supertech Company are expected to follow the economy closely, while thereturns on the Slowpoke Company are not. The return predictions are as follows:

Portfolios with more than one asset: Given thereturns and probabilities for the three possible states listed here, calculate the covariance between thereturns of Stock A and Stock B. For convenience, assume that theexpectedreturns of Stock A and Stock B are 11.75 percent and 18 percent, respectively.
Probabi

Emery, Finnerty & Stowe - Ch. 6, problems A6, B6, & B10 (a only)-
A6. (Expected portfolio return) Musumeci Capital Management has invested its portfolio as shown here. What is Musumeci's expected portfolio return?
B6. (Expected return and risk) Procter & Gamble is considering three possible capital investment

Karen Kay, a portfolio manager at Collins Asset Management, is using the capital asset pricing model for making recommendations to her clients. Her research department has developed the information shown in the following exhibit.
Forecasted Returns, Standard Deviations, and Betas
Forecasted Return Standard Deviation Beta
St