Suppose that the Treasury bill rate is 11% rather than the 1%, value assumed in Table 12.2. Use the betas in that table to answer the following questions.

a. When you asumme this higher risk-free interest rate, what is your assumption about the expected rate of return on the market portfolio?

b. Calculate the highest expected return for the stocks in Table 12.2.

c. Calculate the lowest expected return for the stocks in Table 12.2.

Note: Expected return =1%+ beta 7%