The following questions are from chapter 13 and chapter 14 . Provide brief explanation to each answer. Do not attach amy file. 1. CAPM: Assume the risk-free rate is 5% and the S5.P 500 index return is 10%. AA stock's systematic risk is represented by a beta of 1.2 . A. What is your required rate of return? 8. If after investing in the stock, you earned 15% rate of return, what is the alpha? 2. You have estimated the beta of BM stock at 1.60 . If you purchase the stock today and sell one vear later, the rate of retum you have is 18% while SE.P 500 goes up 106. Do you overpay for the investment? Explain. 3. A. Suppose the firm has a target capital structure with a debt/equity ratio of 1/4, what is the portion of total funding from debt (D/V)? from equity (EN? B. From (A), you have calculated E/V and D/N. Assume the cost of debt is 8% and the cost of equity is 15%. The compary is subject to a corporate tax rate of 25%. What is the weighted average cost of capital for the frrm