Consider the Following Information The Market Risk Premium Is 7

question 80

Multiple Choice

Consider the following information:  $$\begin{array} { l c c } { \text { State of } } & \text { Probability of } & \text { Rate of Return } \\\text { Econony } & \text { State of Economy } & \text { if State Occurs } \\ & &\begin{array}{ll}\text { Stock A } & \text { Stock B }\end{array}\\\text { Recession } & .04& \begin{array}{ll}.097& \quad \quad .102\end{array} \\\text { Normal} & .72& \begin{array}{ll}.114& \quad \quad .133\end{array} \\\text { Boom } & .24 & \begin{array}{ll}.156 & \quad \quad.148\end{array} \\\end{array}$$
The market risk premium is 7.4 percent, and the risk-free rate is 3.1 percent. The beta of Stock A is ________ and the beta of Stock B is ________.

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