$1.$ Mr$.$ Miles observes the strong demand for iPods and iPhones and wants to invest in Apple stock. Unfortunately, Mr$.$ Miles doesn$$t know the return he should expect from his investment. He has been given a risk$-$free rate of $3$ percent, a market return of $10$ percent, and Apple$$s beta of $1\mathrm{.}5.$

a$.$ Calculate Apple$$s expected return.

b$.$ An analyst looking at the same information decides that the past performance of Apple is not representative of its future performance. He decides that, given the increase in Apple$$s market capitalization, Apple acts much more like the market than before and thinks Apple$$s beta should be closer to $1\mathrm{.}1.$ What is the analyst$$s expected return for Apple stock?