1. Stock A has a Beta of 1.2 and an expected return of 9.8%. Stock B has a Beta of 2 and an expected return of 13%. What is expected return of a Stock C with a Beta of 1.5?

11.0%

12.2%

10.0%

9.5%

13.6%

2. You are given the following information: The risk-free rate is 5% and the required rate of return on the market is 12%. What are the risk premium and expected rate of return for the stock A, if beta of stock A=0.85?

5.95% and 10.95%

5.85% and 11.15%

6.10% and 11.10%

5.35% and 10.45%