Stock A has a beta of 1.5 and an expected return of 10%. Stock B has a beta of 1.1 and an expected return of 8%. The current market price for stock A is $20 and the current market price for stock B is $30. The expected return for the market is 7.5%. (assume the risk free asset is a T-bill).

8- What is the risk free rate?

A) 0.25%

B) 1.25%

C) 2.00%

D) 2.50%

E) None of the above

9- What is the expected return on a portfolio consisting of 100 shares of stock A, 60 shares of stock B and $2,200 worth of T-bills.

1. 6.6%
2. 6.9%
3. 7.2%
4. 9.7%
5. None of the above