Scenario analysis for Stocks X and Y:

	Bear Market	Normal Market	Bull Market
Probability	0.2	0.5	0.3
Stock X	20%	18%	50%
Stock Y	15%	20%	10%

Assume you are doing research about Stock B for your client. You estimate that Stock B with a beta () of 1.25 is offering an expected return of 15.0%. You also know that the risk-free rate is 4% and the expected return on the market portfolio is 12%.

3) Predict the expected return on Stock B, according to Capital Asset Pricing Model (CAPM)

(4) Explain to your client whether this stock is worthwhile to buy or not.