1. Cinque Company’s stockholders require a return of 10.125%. The company' beta is 1.25 and the market risk premium is 5.5% What must the Risk Free rate be to satisfy investor requirements? 8.65% 3.25% 2.5% 6.15%
2. By channelling funds from surplus units to deficit units, financial intermediaries help improve economic efficiency. Use a simple demand and supply framework to explain how economic efficiency is aided in this context.