​(Capital asset pricing​ model) Grace Corporation is considering the following investments. The current rate on Treasur

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​(Capital asset pricing​ model)  Grace Corporation is
considering the following investments. The current rate on Treasury
bills is
2
percent and the expected return for the market is
10
percent.
Stock
Beta
K
1.08
G
1.26
B
0.82
U
0.99
​(Click
on the icon
in order to copy its contents into a
spreadsheet.​)
a.  Using the​ CAPM, what rates of return should Grace
require for each individual​ security?
b.  How would your evaluation of the expected rates of return
for Grace change if the​ risk-free rate were to rise to
4
percent and the market risk premium were to be only
7.5
​percent?
c.  Which market risk premium scenario​ (from part a or
b​)
best fits a recessionary​ environment? A period of
economic​ expansion? Explain your response.