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a. Zoe Limited has an authorized share capital of 777,000 shares of $5 par value common stock, of which 265,000 shares have been issued. Those shares were sold at an average of 12 percent over par. Today marks the end of the year and it is clear that Zoe earned $460,000 net income; 4 percent of that income was paid as a dividend. The previous balance sheet showed that, Zoe had $ 3,545,000 in retained earnings. The company owns no treasury stock. Create the equity statement for Zoe Limited

b. Todays T-bill rate is 12.8% and the expected return on a portfolio with beta of 1.0 is 12%

i. Using CAPM, what is the expected market return ii. If a stock has zero beta, what will its expected return be?

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