1. You have stock YYY, which has following information: Beta = 1.75; risk-free rate = 4 percent; market rate of return = 12 percent. However, this stock actually gives 16 percent return. What should be the return of this stock? Is it underpriced or overpriced? How will it go to equilibrium price? 2. Describe the concept of required rate of return in details. 3. If you bought stock A for $2000 and sold it for $2400 after 6 months, what is the HPY of your investment? If you bought stock B for $2000 and sold it for $3000 after three years, what is the HPY of your investment? Which investment is better?