Suppose you observe the following situation for two publicly traded equity Return on Market Portfolio 0.10 Security Standard Beta Expected Return 0.13 2 Stock A 0.25 1.50 Stock B 0.30 0.80 11. What is the risk-free rate based on the information above? A. 4% B.5% .696 D.7% 12. Assume the risk-free rate is 3%, what is the expected return on Stock B based on information above? A. 7.4% B. 7.8% C. 8.2% D. 8.6% assume the risk-free rte is 3%. Suppose that another stock C has a beta equal and an expected return of 9%. Is this security over-priced, under-priced, or adequate priced? A. Over-priced B. Under-priced C. Adequately priced D. Cannot conclude based on the information 14. What is the weight on Stock A if you construct a portfolio, with the two secur has the same systematic risk as the market portfolio? A. 0.15 B. 0.22 C. 0.25 D. 0.29 15. Assume Stock B's expected return is 7%. Why could Stock B have a low than Stock A? A. Because Stock B has a lower systematic risk than Stock A. B. Because Stock B has a lower total risk than Stock A. C. Because Stock B has a lower non-systematic risk. D. Because Stock B is under-priced whereas Stock A is over-priced