1. Assume the following information about the market and XYZ stock's beta=1.50, the risk-free rate is 3.5%, the market risk premium ( return to the market less the risk-free rate) is 10%. Using the CAPM what is the expected return to the stock?

A. 18.50%

B. 7.5%

C. 27.0%

D. 13.5%

2. Project A has an NPV of $20,000 and PI of 1.5. Project B has an NPV of $10,000 and PI of 1.3. Both projects have equal lives. Which project is preferred?

A. Project A

B. Project B

C. Indifferent between projects

D. none of the above