16) The historical average market risk premium is 9 percent; the risk-free rate is 4 percent; and the beta of Brealey Co. is 1.7. Determine the expected return of Brealey in accordance with the CAPM. a. 0.174 b. 0.321 c. 0.218 d. 0.193 17) (Continuation) Assuming that the historical average risk-free rate is also 0.04, and based on the previous information, calculate the expected return of the market portfolio. a. 0.15 b. 0.13 c. 0.10 d. 0.20 18) (Continuation) Myers Co.' s beta is 2 ; the actual return is 0.12. How can you replicate and improve this investment with a combination of risk-free assets and the market portfolio? a. Invest 0.5 of your savings in T-bills and the rest in the market portfolio, for a return of 0.25. b. Borrow an amount equivalent to 50 percent of your savings and invest all in the market portfolio, for a return of 0.25. c. Borrow an amount equivalent to 100 percent of your savings and invest all in the market portfolio, for a return of 0.22. d. Invest 0.35 of your savings in T-bills and the rest in market portfolio, for a return of 0.22. 19) (Continuation) If the stock yield was above market expectations, and assuming that markets are efficient, what will happen with the price and return of Myers Co.? a. Increase in the demand; increase of the stock' s price; decline in its return until it reached the expected return. b. Fall in the demand; fall of the stock' s price; increase in its return until it reached the expected return. c. Fall in the demand; fall of the stock' s price; fall in its return until it reached the expected return. d. Increase in the demand; fall of the stock' s price; increase in its return until it reached the expected return