2 (a) 15 pts. Historical rates of return for the market and for Stock A and Stock B are given below: Year 2 Stock A Stock B Market 5 14% 19 13% 12% 10 -12 -16 20 15 Assume th premium is 5 percent. at the risk-free rate is 6 percent and the market risk i) what are the betas of Stocks A and B? ii) Wh iii) w at are the required rates of return for Stocks A and B? hat is the required rate of return for a portfolio consisting of 80 percent of Stock X and 20% of Stock B? iv) Suppose Stock X's expected return is 22 percent: is Stock X undervalued or overvalued