(6 pts) You have an $80,000 portfolio of large-cap
stocks.  They consists of the following:
Portfolio of large cap stocks:
Stock                beta                  Dollar
amount               
Wal-mart          0.70                  $20,000
IBM                 1.15                  $10,000
PG                   0.80                  $50,000
                        Total                $80,000
What is the beta of your
portfolio?               
Portfolio Beta = _____________
If the current money market rate is 1.2% and the market risk
premium is 7.5%, what is the required rate of return for your large
cap stock portfolio?
Required Rate of Return =
_____________
(2 pts) An option contract represents an
option on ___________...