Chapter 13 1. Write down the capital asset pricing model. What part captures compensation for the pure time value of money? What part captures the compensation/reward for bearing systematic risk? What part captures the adjustment for the amount of systematic risk? 2. Suppose the risk-free rate is 8 percent. The expected return on the market is 16 percent. a. What is the expected market risk premium? b. Suppose Stock A has a beta of 0.7 . What is its expected return? c. Suppose Stock B has an expected return of 24 percent. What must its beta be? A stock has an expected return of 12.15 percent, its beta is 1.31 , and the expected return on the market is 10.2 percer must the risk-free rate be