1. There is a 30 percent probability that a particular stock will earn a 17 percent return and a 70 percent probability that it will earn 11 percent. What is the risk-free rate if the risk premium on the stock is 8.60 percent?
4.20 percent
4.80 percent
5.20 percent
5.40 percent
2. An investor holds a stock for one year. She then receives a dividend of $10 and sells the stock for $120. If her return was 16%, at what price did she buy the stock?
$103.45
$64.80
$139.20
$112.07
3. Stock A has an expected return of 15%; stock B has an expected return of 8%. What is the expected return on a portfolio is comprised of 60% of Stock A and 40% of Stock B?
12.2%
10.8%
9.1%
14.4%
4. What is the return to an investor who purchases a stock for $30, receives a $1.50 dividend at the end of the year, and then sells the share for $28.50?
5%
0%
5%
10%