Suppose the CAPM holds and that asset A has a beta of 0.5 and asset B has a beta of 2. Suppose that the expected rate of return on A is 10% and the risk-free rate is 6%.

(a) What is the expected rate of return on the market?

(b) What is the expected rate of return on asset B?

Assume that the CAPM holds and the risk-free rate is 6% and the expected rate of return on the market is 11%. A share of stock is now selling for $100. It will pay a dividend of $9 per share at the end of the year. Its beta is 1.0. What do investors expect the stock to sell for at the end of the year?