Last year, Rocket Inc. earned a $20\%$ return. Farmer's Corp. earned $12\%.$ The overall market return last year was $15\%,$ and the risk$-$free rate was $3\%.$ If Rocket stock has a beta of $1\mathrm{.}9$ and Farmer's has a beta of $0\mathrm{.}6,$ which stock performed better once you take risk into account?

Rocket's expected return is $\%.($Enter as a percentage and round to one decimal place.$)$

Farmer's expected return is $\%.($Enter as a percentage and round to one decimal place.$)$

Which stock performed better once you take risk into account? $($Select the best answer below.$)$

A$.$ Given its beta, Rocket should have earned a much higher return than it did $(12\%$ vs $20\%).$ Farmer's, on the other hand, earned a higher return than we would have expected vs $10\mathrm{.}2\%.$ So taking risk into account, Rocket was the better stock.

B$.$ Given its beta, Rocket should have earned a much higher return than it did vs $20\%.$ Farmer's, on the other hand, earned a higher return than we would have expected $(12\%$ vs $10\mathrm{.}2\%.$ So$,$ taking risk into account, Farmer's was the better stock.

C$.$ Given its beta, Rocket should have earned a much lower return than it did $(12\%$ vs $10\mathrm{.}2\%.$ Farmer's, on the other hand, earned a higher return than we would have expected $(20\%$ vs $25\mathrm{.}8\%).$ So taking risk into account, Rocket was the better stock.

D$.$ Given its beta, Rocket should have earned a much higher return than it did vs $20\%.$ Farmer's, on the other hand, earned a lower return than we would have expected vs $12\%.$ So taking risk into account, Rocket was the better stock.