$1-$ Here are data on two companies. The T$-$bill rate is $4\%$ and the market risk premium is $6\%.$

What would be the fair return for each company, according to the capital asset pricing model $($CAPM$)?($LO $7-1)$

$2-$ Characterize each company in the previous problem as underpriced, overpriced, or properly priced. $($LO $7-2)$

$3-$ What is the expected rate of return for a stock that has a beta of $1$ if the expected return on the market is $15\%?($LO $7-2)$

a$.15\%.$

b$.$ More than $15\%.$

c$.$ Cannot be determined without the risk$-$free rate. $4-$ Kaskin, Inc., stock has a beta of $1\mathrm{.}2$ and Quinn, Inc., stock has a beta of $\mathrm{.}6.$ Which of the following statements is most accurate? $($LO $7-1)$

a$.$ The expected rate of return will be higher for the stock of Kaskin, Inc., than that of Quinn, Inc.

b$.$ The stock of Kaskin, Inc., has more total risk than Quinn, Inc.

c$.$ The stock of Quinn, Inc., has more systematic risk than that of Kaskin, Inc.