Question: https%253A%252F%252Fnewconnect.meducation.com 252F8/activity question gom #5 i Saved Help Save & Exit Sub Check my work Suppose you observe the following situation: State of Economy Recession

https%253A%252F%252Fnewconnect.meducation.com 252F8/activity question gom #5 i Saved Help Save & Exit Sub Check my work Suppose you observe the following situation: State of Economy Recession Normal Irrational exuberance Probability of State 0.30 0.50 0.20 Rate of Return if State Occurs Stock A Stock B -0.06 -0.04 0.15 0.15 0.50 0.30 a. Calculate the expected return on each stock. (Round the final answers to 2 decimal places.) Expected Return % Stock A Stock B b. Assuming the capital asset pricing model holds and stock A's beta is greater than stock B's beta by 0.65, what is the expected market risk premium? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Expected market risk premium %

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