Equities e. Suppose you are deciding between purchasing the two equities below, both of which are dependent on the state of the world (the economy either operates in a high or low capital world). Given their respective characteristics and there being equal probability that the world will be in each state, which equity would you purchase to maximize your expected return after one year? Stock 1, High Capital Stock 1, Low Capital Stock 2, High Stock 2, Low Capital Capital Required Return 2% 8% 3% 4% Dividend $20 $10 $12 $5 Price of Equity $200 $200 $150 $150 Today f. The economy is just leaving a recession causing firms to have increased optimism in the profitability of research and development. Using rational expectations theory, how would you expect the returns to a representative firm's stock to change