1. A stock with a beta of 1.27 has an expected rate of return of 7.08%. The market-premium (market rate of return - risk-free rate) of the market is 2.88%. What is the risk-free rate? Assume CAPM is true. Round the answer to two decimal places in percentage form. Decimal form answer: Percentage form answer:
2. A stock has a beta of 1.13, the risk-free rate is 2.04% and the market premium is 3.07%. The stock will pay a $2.40 as dividend for 15 years (starting a year from now) and after that nothing (firm will liquidate). What is the price of the stock? Round the answer to two decimal places.