Q1.

Here are data on two companies. The T-bill rate is 5.4% and the market risk premium is 6.8%.

Company	$1 Discount Store	Everything $5
Forecast return	13%	12%
Standard deviation of returns	15%	17%
Beta	1.6	1

What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal places.)

Company	Expected Return
$1 Discount Store:		%
Everything $5		%

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Q2.

What must be the beta of a portfolio with E(r_P) = 16.00%, if r_f = 6% and E(r_M) = 14%? (Round your answer to 2 decimal places.)

Beta of portfolio