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Risk-free rate and the equity premium

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Reference no: EM131117727

Stock A has a beta of 1.2 and an expected return of 17%. Stock B has a beta of 0.8 and an expected return of 13%. If the market is at equilibrium, what are the values for the risk-free rate and the Equity Premium, respectively? [HINT: look at the CAPM formulas]

a. 4% and 8%
b. 5% and 8%
c. 4% and 10%
d. 5% and 10%
e. None of the above

Reference no: EM131117727

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