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5. Martin Ortner holds a $200,000 portfolio consisting of the following stocks: Stock A B D Total Investment $50,000 50,000 50,000 50,000 $200.000 Beta 0.95 0.80 1.00 1.20 What is the portfolio's beta? a. 0.938 b. 0.988 c. 1.037 d. 1.089 e. 1.143 6. Which of the following is an example of a market risk (vs. specific risk)? a. Congress raises tax on all fossil fuel explorations. b. Tesla is recalling hundreds of thousands of one of its best selling luxurv sedans. c. The COVID pandemic. d. The EU imposes import tax on all U.S. petrochemical products e. The SEC restricts after-hour trading of non-exchange members. 7. Calculate the required rate of return for Everest Expeditions Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) the firm has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years. a. 10.29% b. 10.83% c. 11.40% d. 12.00% e. 12.60% 8. Gretta's portfolio consists of $700,000 invested in a stock that has a beta of 1.2 and $300,000 invested in a stock that has a beta of 0.8. The risk-free rate is 6% and the market risk premium is 5%. Which of the following statements is CORRECT? [hint: find the portfolio beta] a. The required return on the market is 10%. b. The portfolio's required return is less than 11%. c. If the risk-free rate remains unchanged but the market risk premium increases by 2%, Gretta's portfolio's required return will increase by more than 2%. d. If the market risk premium remains unchanged but expected inflation increases by 2%, Gretta's portfolio's required return will increase by more than 2%. e. If the stock market is efficient, Gretta's portfolio's expected return should equal the expected return on the market, which is 11%

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