5. (10 points) Suppose the market portfolio is equally likely to increase by 40% or decrease by 20%. (a) Calculate the beta of firm A that goes up on average by 50% when the market goes up and goes down by 25% when the market goes down. (b) Calculate the beta of firm B that goes up on average by 20% when the market goes down and goes down by 10% when the market goes up. (c) Suppose the risk-free interest rate is 4%. Use the Capital Asset Pricing model to determine the cost of capital of firm A and B, respectively. How do they compare with the stocks actual expected returns