Suppose you observe the following situation:

State of Economy Probability of State Rate of Return if State Occurs

Stock A Stock B

Recession $0\mathrm{.}200\mathrm{.}080\mathrm{.}06$

Normal $0\mathrm{.}600\mathrm{.}130\mathrm{.}13$

Irrational exuberance $0\mathrm{.}200\mathrm{.}480\mathrm{.}28$

a$.$ Calculate the expected return on each stock. $($Round the final answers to $2$ decimal places.$)$

Expected Return

Stock A

$\%$

Stock B

$\%$

b$.$ Assuming the capital asset pricing model holds and stock A$\text{'}$s beta is greater than stock B$\text{'}$s beta by $0\mathrm{.}55,$ what is the expected market risk premium? $($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

Expected market risk premium

$\%$