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The following table provides a security analyst's expected return on two stocks in two particular scenarios for the marketreturn. Use the above information to answer this and the next 3 questions. Conslder the following statements. 1. The beta of stock A is greater than 3 . 11. The beta of stock B is less than 1 . Which of the following is correct? a. Statement I is correct, Statement II is incorrect. b. Statements I and II are both incorrect. c. Statement I is incorrect, Statement II is correct. d. Statements I and II are both correct. What is the value of the risk free rate in the above economy? a. 2% b. 3% C. 2.5% d. 3.5% Consider the following statements. 1. The expected return on the market is greater than 12% II. The expected return for stock A is less than 26%. III. The expected retum for stock B is less than 11%. Which of the following is correct? a. Statements I, II and III are correct. b. Statements II and III are correct, Statement I is incorrect. c. Statements I, II and III are incorrect. d. Statements I and III are correct, Statement II is incorrect. e. Statements I and II are correct, Statement III is incorrect. Consider the following statements. I. The expected return on the market is greater than 12% II. The expected return for stock A is less than 26%. III. The expected retum for stock B is less than 11%. Which of the following is correct? a. Statements I, II and III are correct. b. Statements II and III are correct, Statement I is incorrect. c. Statements I, II and III are incorrect. d. Statements I and III are correct, Statement II is incorrect. e. Statements I and II are correct, Statement III is incorrect. If the risk free rate is 5%, what hurdle rate should be used by the management of firm A for a project with the risk characteristics of firm B's stock? a. 3.8% b. 12.6% c. 10.4% d. 10.8%