if the annual risk-free rate is 2% and the expected annual market return is 7%, answer the questions below:

a. Consider the betas of Stocks A and B below. Assuming the CAPM holds, compute the required annual returns for Stocks A and B, respectively.

Stock	Beta
A	1.20
B	0.45

b. If the actual return for Stock A was 10.5% and the return for Stock B was 7%, calculate the abnormal return for each of these stocks 1) without risk adjustment and 2) adjusted for systematic risk.

c. Based on the information above, which of these stocks is better value.