Part A:
The expected return on the entire stock market is 14% this year. The required rate of return on ABC stock is 12.7%. US Treasury securities are expected to earn 4.4%. Using the assumptions of the capital asset pricing model, what is ABC's beta? (Show your answer to two decimal places, e.g., 12.34)
Part B:
If the market risk premium is 8 percent and the risk-free rate is 3.9, what is the expected rate of return for a stock with a beta of 0.58 under the Capital Asset Pricing Model (CAPM)? (show your answer in decimal form to four places)