Problem 3 You are given the following information about Stocks A and B Rate of Return if State Occurs State of Economy Probability of State of Economy 0.30 0.50 0.20 Stock A Stock B Boom Normal Recession 14.00% 12.00% -6.00% 28.00% 16.00% -14.00% The expected return on the market portfolio is 9% and the risk-free rate is 4%. Assuming that neither of these stocks is over or undervalued a) What are the betas for Stocks A and B? What would be the beta of a portfolio consisting of 30% of Stock A and 70% of Stock B? What would be the expected return of that portfolio (30% of Stock A and 70% of Stock B)