1) If Starbucks beta is 1.5 and the stock market return was 10% on a given day. What do we expect Starbucks return to be that day?

2) If the market risk premium is 5% and risk-free rate is 3%, calculate the expected return of investing in Starbucks (beta = 1.5).

3) True or False: A security with only diversifiable risk has an expected return that exceeds the risk-free interest rate.