1. Given the following information, determine the beta coefficient for Stock L that is consistent with equilibrium: = 8.5%; rRF = 2.5%; rM = 11.5%. Round your answer to two decimal places.

2. Stock R has a beta of 2.5, Stock S has a beta of 0.75, the required return on an average stock is 12%, and the risk-free rate of return is 4%. 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. Calculate the required rate of return for Mudd Enterprises assuming that investors expect a 4.1% rate of inflation in the future. The real risk-free rate is 2.0%, and the market risk premium is 6.5%. Mudd has a beta of 2.5, and its realized rate of return has averaged 8.5% over the past 5 years. Round your answer to two decimal places. __ %