1. Stock A has an expected rate of return of 15%. Todays expected return on the market portfolio is 10%. The current risk free interest rate is 7,5%. What is the beta of stock A?
2. A project with a beta of 1.5 has cash flows 100 in year 1, 200 i year 3, 500 in year 4 and 100 in year 6. The current expected market return is 10%. The risk free interest rate is 5%. What is the highest cost that makes this project worth investing in?
3. Equity in the company Q has an expected return of 12%, a beta of 1.4 and a standard deviation of 20%. The current risk free interest is 10%. What is the current expected market return?