Suppose the rate of return on short$-$term government securities $($perceived to be risk$-$free$)$ is about $7\%.$ 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:

What is the expected rate of return on the market portfolio?

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

What would be the expected rate of return on a stock with $\backslash$beta $=0?$

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

Suppose you consider buying a share of stock at $$60.$ The stock is expected to pay $$2$ dividends next year and you expect it to sell then for $$63.$ The stock risk has been evaluated at $\backslash$beta $=0\mathrm{.}5.$ Is the stock overpriced or underpriced?