Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 12%. According to the capital asset pricing model: (Leave no cells blank - be certain to enter "o" wherever required.) a. What is the expected return on the market portfolio? Expected rate of retum % b. What would be the expected return on a zero-beta stock? Expected rate of return % Suppose you consider buying a share of stock at a price of $40. The stock is expected to pay a dividend of $3 next year and to sell then for $41. The stock risk has been evaluated at B=-0.5. c-1. Using the SML, calculate the fair rate of return for a stock with a B = -0.5. Fair rate of return % Suppose you consider buying a share of stock at a price of $40. The stock is expected to pay a dividend of $3 next year and to sell then for $41. The stock risk has been evaluated at B=-0.5. c-1. Using the SML, calculate the fair rate of return for a stock with a B = -0.5. Fair rate of retum % c-2. Calculate the expected rate of return, using the expected price and dividend for next year Expected rate of return c-3. Is the stock overpriced or underpriced? Underpriced Overpriced