only number 24

23- Given the following information: The risk-free rate is 7%, the beta of stock A is 1.2, the beta of stock B is 0.7, the expected retum on stock A is 13.5%, and the expected return on stock B is 11%. Further, we know that stock A is fairly priced and that the betas of stocks A and B are correct. Which of the following regarding stock B must be true? A) The price of stock B is too high. B) The expected return on stock A is too high. C) The price of stock B is too low. D) Stock B is also fairly priced. E) None of the above. + 24- What is the standard deviation on a portfolio that is invested 30% in stock A and 70% in stock B, given the following information? Economic State Probability of State Return on Stock A Return on Stock B Normal 80% 8% 6% Boom 20% 15% 7% A) 1.12% B) 2.28% C) 4.60% D) 6.60% E) 7.16%