1. You have a portfolio with a beta of 1.74. What will be the new portfolio beta if you keep 89 percent of your money in the old portfolio and 11 percent in a stock with a beta of 0.74? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
2. Why does a market participant not earn a risk premium on a carry arbitrage?
3. Explain the difference in the cost of retained earnings and the cost of issuing a new common stock.