### Risk Free Rate and Market Risk Premium

1. Risk- Free Rate A stock has an expected return of 14 percent, a beta of 1.70, and the expected return on the market is 10 percent. What must the risk-free rate be? Risk-Free Rate = ? 2. Market Risk Premium A stock has a beta of .8 and an expected return of 13 percent. If the risk-free rate is 4.5 percent, what is the