1. Using the Capital Asset Pricing Model (CAPM), solve for the required rate of return/cost of capital for a stock with the following attributes: Stock's beta = 1.8 Historic stock market return = 12.2% Treasury bill yield = 1.55%
2. If you deposit your money in a bank account that pays 6.8% interest compounded weakly, what is the effective annual rate (EAR)? Please, explain in detail
Please round your answer to the fourth decimal (e.g. 0.0000)