2. (20 marks) Suppose the yield on risk-free security is about 4%. Suppose also that the expected return required by the market for a portfolio with a beta of 1 is 12%. According to the capital asset pricing model: a. What is the expected return on the market portfolio? (5 marks) b. What would be the expected return on a zero-beta stock? (5 marks) c. Suppose you consider buying a share of stock at a price of $40. The stock is expected to pay a dividend of $3 next year and to sell then for $41. The stock risk has been evaluated at B = -.5. Is the stock overpriced or underpriced? (10 marks)