3. (7 points- The value of risk management on perfect financial markets) Steel Inc. (SI) has the following end-of-year cash flows per share: $200 with a probability of 0.8 when there is no severe workplace accident, $150 with a probability of 0.2 in case of a severe workplace accident. The risk-free rate is 3%, the expected return of the market is 5% and SI's beta factor is given by 0.8. a. Find the expected return on SI stock. (2 points) b. Find the value of SI stock. If you buy SlI stock at this price, what are the two possible end-of-year returns? (3 points) Determine the value of SI stock if the company buys workers' comp insurance that fully reimburses losses. Distinguish in your answer between a scenario where the premium is actuarially fair and a scenario with a 15% loading. (2 points) c