1. How could you build a portfolio of assets that eliminates risk entirely? Is this possible in the actual market?

2. Stock R has a beta of 1.6, Stock S has a beta of 0.45, the required return on an average stock is 10%, and the risk-free rate of return is 6%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places. %

3. Assume that the risk-free rate is 3.5% and the required return on the market is 13%. What is the required rate of return on a stock with a beta of 0.7? Round your answer to two decimal places. %