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 Sl'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)