(Using the CAPM to find expected returns) Grace Corporation is considering the following investments: BE . The current rate on Treasury bills is 2.5 percent and the expected return for the market portfolio is 7.5 percent. a. Using the CAPM, what rates of return should Grace require for each individual stock? b. How would your evaluation of the expected rates of return for Grace change if the risk-free rate were to rise to 4.5 percent and the market risk premium were to be only 4.5 percent? c. Which market risk premium scenario (from part a or b) best fits a recessionary environment? a. The expected rate of return for stock K, which has a beta of 1.15, is %. (Round to two decimal places.) - X Data table (Click on the following icon , in order to copy its contents into a spreadsheet.) Stock Beta 1.15 1.39 Check answer ex Clear all 0.82 0.95 9:43 PM W 2/3/2025