Suppose the rate of return on short$-$term government securities $($perceived to be risk$-$free$)$ is about $6\%.$ Suppose

also that the expected rate of return required by the market for a portfolio with a beta of $1$ is $16\%.$ According to the

capital asset pricing model:

Required:

a$.$ What is the expected rate of return on the market portfolio?

Note: Round your answer to $2$ decimal places.

b$.$ What would be the expected rate of return on a stock with $=0?$

Note: Round your answer to $2$ decimal places.

c$.$ Suppose you consider buying a share of stock at $$58.$ The stock is expected to pay $$2\mathrm{.}5$ dividends next year and

you expect it to sell then for $$62.$ The stock risk has been evaluated at $=-0\mathrm{.}5.$ Is the stock overpriced or

underpriced?