4. Suppose the market portfolio is equally likely to do well or do poorly. If does well, the market increases by 30%, and if the market does poorly it decreases by 10%. Calculate the betas for the following firms:

Firm A: If the market portfolio does well, then the firms return will equal -22%. If the market portfolio does poorly, the firms return will equal 18%.

Firm B: Regardless of whether the market portfolio does well or poorly then the firms return is expec- ted to equal 4%.