You analyze Stock A and forecast a 14% rate of return and compute a beta of 1. You

analyze Stock B and forecast an 8% rate of return and compute a beta of 1.50. The markets expected

return is 9.50% and the risk-free rate is 4.75%. According to the capital asset pricing model (CAPM),

which stock is a better buy? Compute their expected alpha. Hint: Compare your forecast to the expected

CAPM results