1. An analyst gathered the following information for a stock and market parameters: stock beta = 1.4; expected return on the Market = 12.3%; expected return on T-bills = 4.6%; and current stock Price = $5.41. Calculate the required return and expected return for this stock. What is this stock's required rate of return? (4 decimals)
2. The market risk premium for next period is 8.9% and the risk-free rate is 2.7%. Stock Z has a beta of 1.3 and an expected return of 9.3%. What is the reward-to-risk ratio for Stock Z? (3 decimals)