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1.Consider the following returns and states of the economy for TZ.Com.:

Economy	Probability	Return
Weak	20%	-10%
Normal	20%	7%
Strong	60%	20%

What is the standard deviation of TZ's returns?

2.You decide to form a portfolio of the following amounts invested in the following stocks. What is the beta of the portfolio?

SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN INPUT THE NUMBER ROUNDING TO 2 DECIMALS i.e. if your answer is 1.2455, enter it as 1.25 ONLY

Stock	Amount	Beta	Expected Return
Apple	$8,545	1.56	10.50%
Microsoft	$3,832	2.46	16.90%
Ford	$5,536	0.50	15.75%
Time Warner	$4,453	1.05	11.80%

3.Your broker has developed a list of firms, their betas, and the return he expects the stock to yield over the next twelve months (labeled "Expected Return"). You have estimated that the risk-free rate is 5% and the return to the market will be 12%. Assuming that CAPM is correct, which stock should you purchase?

Firm	Beta	Expected Return
Anderson, Inc.	0.90	10.5%
Delta Vanlines	1.25	13.0%
Nathan's Bakeries	1.60	16.0%
Z-man Electronics	1.90	19.0%

4.What is the future value of an annuity due that pays $800 per year for 15 years? Use an annual interest rate of 9.50%.

Group of answer choices

Z-man Electronics

Delta Vanlines

All of the stocks

Nathan's Bakeries

Anderson, Inc.

5.You just deposited $9,730 in an account. What is the future value in 17 years? Use a nominal rate (monthly compounding) of 9.00%.

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