27) A stock's beta equals 2. The market return is expected to be 8 percent. The risk-free rate equals 3%. What is the expected return on the stock based on the CAPM?

A. 5 percent

B. 8 percent

C. 10 percent

D. 13 percent

28) Suppose, during a given year, the return on an equal-weighted portfolio consisting of the 500 stocks in the S&P 500 is lower than the actual return on the S&P 500 (which is value-weighted). This means that, during the year, on average the returns of larger stocks are generally_________ the return of smaller stocks.

A) higher than

B) lower than

C) equal to

D) more volatile than