1. Which one of the following is the slope of the security market line?
Risk-free rate
Risk premium on an individual asset
Market rate of return
Market risk premium
Beta coefficient
2. You have a portfolio that is invested 16 percent in Stock A, 36 percent in Stock B, and 48 percent in Stock C. The betas of the stocks are .61, 1.16, and 1.45, respectively. What is the beta of the portfolio?
3. The risk-free rate is 4 percent and the market expected return is 11.3 percent. What is the expected return of a stock that has a beta of 1.25?