If the annual risk-free rate is 2% and the expected annual market return is 4%, answer the questions below:

1. The table below shows the market betas of the shares of IBM and Apple, respectively.

   Stock	Beta
   IBM	1.30
   Apple	1.10

   The equilibrium annual rate of return of IBM share is ____% if the CAPM holds. (Round the number to two (2) decimal places). (1 mark)

2. If the share price of Apple today is $150 and the market expects that the price will rise to $158 one year later. Under the CAPM, the share of Apple is currently ______________ (under-priced or over-priced). (1 mark)
3. According to (a) and (b), the reasonable share price of Apple today should be $________. (Round the number to two (2) decimal places). (1 mark)