1. Suppose that the current risk free rate is 3.5% and the required rate of return on the market portfolio is 12%. If your financial advisor tells you that the required return for shares of Bilton, Inc. is 16.25%, then what level of beta (b) applies for these shares?
2. The NetTech Co. has just paid a dividend of $1 per share. The dividends are expected to grow at 20% per year for the next three years and at the rate of 5% per year thereafter. If the required rate of return on the stock is 15% (APR), what is the current value of the stock?