Question $3(13$ points$)$

a$)$ Assume the risk$-$free rate is $\backslash (8\backslash \%\backslash )$ and the expected rate of return on the market index is $\backslash (18\backslash \%\backslash ).$ Using the results of the regression of the stock's excess return on the market index excess return in a one$-$factor CAPM below, what is beta of the stock? What is the risk premium of the security? $(5$ points$)$

b$)$ If the market return and the risk$-$free return are similar to part $($a$),$ the stock's price is now $\backslash (\backslash$$ $100\backslash )$ and it is expected to give $\backslash (\backslash$$ $9\backslash )$ dividend during the year. What is the expected stock's price in one year? $(4$ points$)$

c$)$ If you know that the standard deviation of the security$\text{'}$s return is $0\mathrm{.}5$ and the standard deviation of the market index return is $0\mathrm{.}3.$ What is the correlation coefficient between the security$\text{'}$s return and the market return? $(4$ points$)$