1.The market rate of return is 11.8 percent and the risk-free rate is 3.45 percent. Galaxy Co. has 36 percent more systematic risk than the overall market and has a dividend growth rate of 3.5 percent. What is the firm's cost of equity?

2.You have $11,000 to invest and would like to make a portfolio with an expected return of 9.7 percent. You can invest in Stock K with an expected return of 8 percent and Stock L with an expected return of 11.6 percent. How much will you invest in Stock K?