38) What happens to the expected portfolio returm if the portfolio beta increases from 1.0 to 1.5, the risk-free rate decreases from 5 to 4%, and the market risk premium increases from 8 to 9%? A. It increases from 13 to l 7.5%. C. It increases from 13 to 13.5%. B. It increases from 12 to 12.5%. D. It increases from 12 to 14.0%. 39) A portfolio consists of an index mutual fund which represents the overall market and Treasury bills. The fund has a portfolio weight of60%. The risk-free rate is 32% and the market risk premium is 7.6%. What is your best estimate of the portfolio expected rate of return A.7.76% B. 8.39% C. 10.80% D. 9.02% 40) You believe that Alpha stock which has a beta of L32 will return 16.0% this coming year. The market is expected to retum 11.4% and T-bills r turn 3.8%. According to CAPM, which one of these statements is correct given this information? A. The stock is currently underpriced. B. The risk premium on the stock is too low given the stock's beta C. The stock plots to the left of the market on a security market line graph D. The stock plots below the security market line