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Use the information below on portfolios A and B to answer the next two questions. Assume CAPM holds. Portfolio A B Expected return Beta 1.50

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Use the information below on portfolios A and B to answer the next two questions. Assume CAPM holds. Portfolio A B Expected return Beta 1.50 0.75 10.5% 6.75% 7. Determine the expected return on the market in this economy. A. 6.0% B. 7.0% C. 8.0% D. 9.0% E. 10.0% 8. Determine the risk-free rate in this economy. A. 1.0% B. 1.5% C. 2.5% D. 2.0% E. 3.0% +

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