Consider the following two scenarios of the economy and, in each scenario, the returns of the

market portfolio, stock A$,$ and stock B$.$

a$.$ If each scenario is equally likely, find the beta of each stock!

b$.$ If the rate of return on treasury bills is $4$ percent, what does the CAPM say about the

expected rate of return on the two stocks?

c$.$ Which stock seems to be a better buy, based on your previous answers?