7.3. The market portfolio has an expected rate of return of 0.12. Its volatility is 0.25. For stock DMY, the equity cost of capital is 0.14. Its volatility is 0.40. The risk-free interest rate is 0.04. Determine the correlation of DMY with the market portfolio. 7.15. The annual effective risk-free interest rate is 0.04 and the debt cost of capital for a company is 0.06. The recovery rate for defaulted bonds is 20%. Calculate the assumed annual default rate implicit in the debt cost of capital