Exhibit 7.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM You expect the risk-free rate (RFR) to be 4 percent and the market return to be 10 percent. You also have the following information about three stocks.

		Current	Expected	Expected
Stock	Beta	Price	Price	Dividend
A	1.5	$10	$11.50	$1.00
B	1.1	$27	$30	$0.00
C	0.8	$35	$36	$1.50

Refer to Exhibit 7.7. What are the estimated rates of return for the three stocks (in the order A, B, C)?

a. 18.7 percent, 11.1 percent, 8.8 percent

b. 15.0 percent, 11.1 percent, 2.9 percent

c. 25.0 percent, 11.1 percent, 7.1 percent

d. 13.0 percent, 10.6 percent, 8.8 percent

e. 21.7 percent, 10.0 percent, 6.9 percent