Investments A and B both offer an expected rate of return of 12. The standard deviation of A is 30 percent and that of B is 20 percent. If an investor wishes to invest in either A or B, then the investor should:

a) Prefer A to B

b) Prefer B to A

c) Prefer a portfolio including both A and B

d) The answer cannot be determined without knowing the investors' risk preferences

Suppose the beta of Microsoft is 1.25, the risk-free rate is 3 percent, and the market risk premium is 9 percent. Calculate the expected return for Microsoft.

a) 10.5 %

b) 14.25 %

c) 13.25 %

d) 8.65 %

e) 28.25 %