1. You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 0.85. You are considering selling $100,000 worth of one stock with a beta of 0.95 and using the proceeds to purchase another stock with a beta of 1.35. What will the portfolio's new beta be after these transactions? Do not round intermediate calculations. Round your answer to two decimal places.

2.

Stock R has a beta of 1.1, Stock S has a beta of 0.35, the expected rate of return on an average stock is 11%, and the risk-free rate is 4%. By how much does the required return on the riskier stock exceed that on the less risky stock? Do not round intermediate calculations. Round your answer to two decimal places.

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