MULTIPLE CHOICE PROBLEMS

(e) 1 Calculate the expected return for A Industries which has a beta of 0.75 when the risk free rate is 0.07 and you expect the market return to be 0.18. a) 11.13% b) 11.97% c) 12.25% d) 13.00% e) 15.25%

(c) 2 Calculate the expected return for B Services which has a beta of 0.71 when the risk free rate is 0.09 and you expect the market return to be 0.13. a) 11.13% b) 11.47% c) 11.84% d) 13.00% e) 15.25%

(c) 3 Calculate the expected return for C Inc. which has a beta of 0.8 when the risk free rate is 0.04 and you expect the market return to be 0.12. a) 8.10% b) 9.60% c) 10.40% d) 11.20% e) 12.60%

(e) 4 Calculate the expected return for D Industries which has a beta of 1.0 when the risk free rate is 0.03 and you expect the market return to be 0.13. a) 8.6% b) 9.2% c) 11.0% d) 12.0% e) 13.0%

(d) 5 Calculate the expected return for E Services which has a beta of 1.5 when the risk free rate is 0.05 and you expect the market return to be 0.11. a) 10.6% b) 12.1% c) 13.6% d) 14.0% e) 16.2%

(c) 6 Calculate the expected return for F Inc. which has a beta of 1.3 when the risk free rate is 0.06 and you expect the market return to be 0.125. a) 12.65% b) 13.55% c) 14.45% d) 15.05% e) 16.34%

USE THE FOLLOWING INFORMATION FOR THE NEXT FIVE PROBLEMS

Rates of Return Year RA Computer Market Index 1 11 15 2 9 13 3 -11 14