Question 1 The following information is provided . Risk free rate is 2% The current expected rate of return for the market is 7% Analysts estimate that the market beta of Stock A is .75 According to the capital asset pricing model (CAPM), the required return on Stock A as a decimal rounded to the nearest .001 is Question 2 The following information about a stand-alone investment is given: Economic State Very poor Poor Average Good Very good Probability of Rate of Return if Occurrence State Occurs .10 .20 .40 .20 .10 1.00 (.25) (.05) .15 .35 .55 2 pts The expected rate of return in decimal form rounded to .01 is 2 pts