Part 1: The stock of United Industries has a beta a 1.26 and an expected return

Question

Part 1: The stock of United Industries has a beta a 1.26 and an expected return of 11.8. The risk-free rate of return is 5 percent. What is the expected return on the market? A) 12.31 B) 7.83 C) 6.80 D) 10.40 E) 8.89 Part 2: The common stock of Jensen Shipping has an expected return of 15.20 percent. The return on the market is 11 percent and the risk-free rate of return is 3.5. What is the beta of this stock? A) 1.17 B) 2.56 C) 0.75 D) 1.56 E) 1.23 Part 3: Your portfolio has a beta of 1.18. The portfolio consists of 11 percent U.S. Treasury bills, 32 percent in stock A, and 57 percent in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B? A) 1.46 B) 0.57 C) 1.14 D) 1.24 E) 1.51

Explanation / Answer

part 1: c)6.80 part 2: b)2.56 part 3: c)1.14

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