1. A stock has an expected return of 13.5 percent, its beta is 1.40, and the expected return on the market is 11.5 percent. What must the risk-free rate be?

2. How much should you be willing to pay for QE stock if you feel that the 7.45 percent growth rate can be maintained indefinitely and you require a 16.30 percent return?

3. The average annual return on an Index from 1986 to 1995 was 21.40 percent. The average annual T-bill yield during the same period was 7.15 percent. What was the market risk premium during these ten years? (Round your answer to 2 decimal places.)