1. Nicks Enchiladas Inc. has preferred stock outstanding that pays a dividend of $12.10 at the end of each year. The preferred sells for $72 a share. What is the stocks required rate of return (assume the market is in equilibrium with the required return equal to the expected return)
2. The market and Stock J have the following probability distributions:

Probability r_M r_J

0.1 12% 16%

0.6 8 7

0.3 20 13

Calculate the expected rates of return for the market and Stck J.