Assume both portfolios A and B are well diversified, that E(rA)=13.6% and E(rB)= 14.4\%. If the economy is described by the CAPM, and A=1 while B=1.1, what must be the risk-free rate? 2% 4.2% 3.4% 1.5% 5.6% Question 2 (10 points) The market price of a security is $56. Its expected rate of return is 12%. The risk-free rate is 5%, and the market risk premium is 9%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity $31.32$35.37$37.12$33.75