1. According to the CAPM, what is the market risk premium given an expected return on a security of 13.6%, a stock beta of 1.2, and a risk-free interest rate of 4%?
2. Your firm has been told that it needs $100,000 today to fund a $150,000 expansion project 6 years from now. What rate of interest was used in the present value computation?
3. What is the effective annual rate of 20 percent compounded quarterly?