PROBLEM $1$: Week $1$ and Week $2$ Risk & Return Exercises $$ A few years ago, the Value Line Investment Survey reported the following market betas for the stocks of selected healthcare providers: $$ Company $$ Beta $$ Tenet Healthcare $0\mathrm{.}80$ Beverly Enterprises $1\mathrm{.}10$ HCA Healthcare $1\mathrm{.}35$ United Health Group $1\mathrm{.}60$ At the time these betas were developed, reasonable estimates for the risk$-$free rate, RF$,$ and the required rate of return on the market, R$($Rm$),$ were $6\mathrm{.}5$ percent and $13\mathrm{.}5$ percent, respectively. $$ a$.$ What are the required rates of return on the four stocks? $$ b$.$ Why do their required rates of return differ? $$ c$.$ Suppose that a person is planning to invest in only one stock rather than hold a well$-$diversified stock $$ portfolio. Are the required rates of return calculated above applicable to the investment? Explain your $$ answer. $$ PROBLEM $2$: Week $1$ and Week $2$ Risk & Return Exercises $$ Assume that HCA is evaluating the feasibility of building a new hospital in an area not currently served by the company. The company's analysts estimate a market beta for the hospital project of $1\mathrm{.}2,$ which is somewhat higher than the $0\mathrm{.}8$ market beta of the company's average project. Financial forecasts for the new hospital indicate an expected rate of return on the$$ investment of $20$ percent. If the $$ risk$-$free rate, RF$,$ is $7$ percent and the required rate of return on the market, R$($Rm$),$ is $12$ percent, is the new hospital in the best interest of HCA's shareholders? Explain your answer. $$