Assume that the real risk-free rate is 4 percent and the maturity risk premium is zero. If the nominal rate of interest on one-year bonds is 11 percent, and on comparable-risk two-year bonds it is 13 percent, what is the one-year interest rate that is expected for Year 2? What inflation rate is expected during Year 2?

. Suppose that rRF= 5% and rM= 12%. What is the appropriate required rate of return for a stock that has a beta coefficient equal to 1.5?