Suppose the yield on short-term government securities (perceived to be risk-free) is about 7.76%. Suppose also that the expected return required by the market for a portfolio with a beta of 1.0 is 17.76%. According to the capital asset pricing model:

Required:
(a)	What is the expected return on the market portfolio? (Round your answer to 2 decimal places. \

Rate of return

%

(b)	What would be the expected return on a zero-beta stock? (Round your answer to 2 decimal places. Omit the "%" sign in your response.)

Rate of return

%

(c)	Suppose you consider buying a share of stock at a price of $35. The stock is expected to pay a dividend of $7 next year and to sell then for $53. The stock risk has been evaluated at ? = -0.5. Is the stock overpriced or underpriced?