Value of risk management on perfect financial markets (8 points). Steel Inc. (SI) has the following end-of-year cash flows per share: $322 with a probability of 90% when there is no workplace accident, or $222 with a probability of 10% in case of a severe workplace accident. The risk-free rate is 1%, the expected return of the market is 5%, and SI's beta factor is 0.75. a. Use the CAPM to find the expected return on SI stock. (1 point) b. Find the value of SI stock by discounting the expected end-of-year cash flows. If you buy SI stock at this price, what are the two possible end-of-year returns? (3 points) c. Determine the value of SI stock if the company buys workers' compensation insurance that fully reimburses the loss. Distinguish between a scenario with an actuarially fair premium and a 25% loading. Summarize your findings in a few words. (4 points)