1. What is the expected return on the market portfolio at a time when the risk free rate (e.g., T-Bill rate) is 4% and a stock with a beta of 1.5 is expected to yield 16%? (In percent without % sign, E.g. 33)
2. A company’s equity beta is 1.2. The risk-free rate is 5% and the market risk premium is 6%. What is the company’s cost of equity? (In percent without % sign, E.g. 33)