1. Consider the following data for two risk factors (1 and 2) and two securities (J and L):

rf=0.05	bJ1 =0.80
r1-rf= 0.02	bJ2 =1.40
r2-rf= 0.04	bL1 =1.60
	bL2 =2.25

a. Compute the expected returns for both securities.

b. Suppose that Security J is currently priced at $22.50 while the price of Security L is $15.00. Further, it is expected that both securities will pay a dividend of $0.75 during the coming year. What is the expected price of each security one year from now?