Suppose the risk-free interest rate is 4%.

a. i. Use the beta you calculated for the stock in Problem 33

(a) to estimate its expected return.

ii. How does this compare with the stock’s actual expected return?

b. i. Use the beta you calculated for the stock in Problem 33

(b) to estimate its expected return.

ii. How does this compare with the stock’s actual expected return?

Appendix