Under the Following Conditions, What Are the Expected Returns for Stocks

question 44

Multiple Choice

Under the following conditions, what are the expected returns for stocks A and C? $$\begin{array} { l l } \lambda ^ { 0 } = 0.07 & b _ { a , 1 } = 0.95 \\k _ { 1 } = 0.04 & b _ { a , 2 } = 1.10 \\k _ { 2 } = 0.03 & b _ { c , 1 } = 1.10 \\& b _ { c , 2 } = 2.35\end{array}$$

• A)14.1% and 17.65%
• B)14.1% and 18.45%
• C)17.65% and 18.45%
• D)18.45% and 17.52%
• E)None of the above

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