Suppose a risky security pays an expected cash flow of $81 in one year. The​ risk-free rate is 4%​, and the expected return on the market index is 10.1%.
a. If the returns of this security are high when the economy is strong and low when the economy is​ weak, but the returns vary by only half as much as the market​ index, what risk premium is appropriate for this​ security?
b. What is the​ security's market​ price?