Suppose the yield on short-term government securities (perceived to be risk-free) is about 5%. Suppose also that the expected return required by the market for a portfolio with a beta of 1.0 is 8.0%. According to the capital asset pricing model: Required: a. What is the expected return on the market portfolio? (Round your answer to 1 decimal place.) Expected rate of return 80% b. What would be the expected return on a zero-beta stock? Expected role of return Suppose you consider buying a share of stock at a price of $100. The stock is expected to pay a dividend of $9 next year and to sell then for $103. 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. (Round your answer to 1 decimal place.) 1 Fair rate of return 13 51% Suppose you consider buying a share of stock at a price of $100. The stock is expected to pay a dividend of $9 next year and to sell then for $103. 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. (Round your answer to 1 decimal place.) Fait rate of return 13.5 % c-2. Calculate the expected rate of return, using the expected price and dividend for next year. (Round your answer to 2 decimal places.) Expected rate of return 12.00% c-3. Is the stock overpriced or underpriced? Overpriced Underpriced