Required:

a$.$ Find the beta of each stock.

b$.$ If each scenario is equally likely, find the expected rate of return on the

market portfolio and on each stock.

c$.$ If the T$-$bill rate is $5\%,$ what does the CAPM say about the fair expected

rate of return on the two stocks?

d$.$ Which stock seems to be a better buy on the basis of your answers to $($a$)$

through $($c$)?$