Assume that the risk-free rate is 7% and the market risk premium is 5%. What is the required return for the overall stock market? Round your answer to two decimal places. % What is the required rate of return on a stock with a beta of 2.22 Round your answer to two decimal places. % Stocks A and B have the following probability distributions of expected future returns Probability A B 0.1 (14%) (32%) 0.2 2 0 0.2 12 23 0.3 22 25 0.2 30 48 a. Calculate the expected rate of return, to, for Stock B (A - 14.00%.) Do not round intermediate cakulations, Round your answer to two decimal places. % b. Calculate the standard deviation of expected returns, ga, for Stock A (ou - 22,68%.) Do not round intermediate calculations. Round your answer to two decimal places % Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places. portfolio sense. Is it possible that most investors might regard Stock B as being less risky than Stock A? 1. of Stock B is more highly correlated with the market than A, then it might have the same beta as Stock A, and hence be just as risky in a 11. If Stock Bis less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a porti- sense III. 1 Stock is less highly correlated with the market than , then it might have a higher beta than Stock A, and hence be morensky in a portfolio sense IV. If Stock B is more highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be less risky in a portfolio sense V. If Stock is more highly correlated with the market than A, then it might have a lower hetta hehe