You are considering a portfolio invested 40% in stock A and 60% in stock B Stock A has a standard deviation of 12% and Stock B has a standard deviation of 16%. The correlation between the two stocks is 0.54. What is the portfolio’s standard deviation

B) What is the expected return (expressed in %) of a portfolio that has $7500 in Stock M and $5000 in Stock N? Assume the following three scenarios Recession (with 15% probability), Normal (with 70% probability), boom (with 15% probability) The returns on Stock M in each scenario are the following -12% in Recession, 6% in Normal, 12% in Boom. The returns on Stock N in each scenario are the following 10% in Recession, -2% in Normal, 5% in Boom

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C) What is a firm’s weighted average cost of capital if the stock has a beta of 1.45 Treasury bills yield 5%, and the market risk premium is 9%? In addition to equity, the firm finances 30% of its assets with debt that has a yield to maturity of 9%. The firm is in the 35% marginal tax bracket

D) An investor has been invited to invest in a project that will require an initial investment of $10,000. At the end of years 1 2 and 3 the investment will return $2,000, $4,000 and $6,000 respectively. She figures her Cost or Capital is 75%. What is the IRR


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