Suppose that three stocks (A, B, and C) and two common risk factors (1 and 2) have the following relationship:

E(RA) = (2.6)1 + (3.4)2

E(RB)=(-0.2)1 +(2.3)2

E(RC)=(3.1)1 +(-1.2)2

Assume that all three stocks currently sell for $20 and will not pay a dividend in the next year.

If 1 = 3.2% and 2 = 1.7%, the prices expected next year for each of the stocks is:

A. E(Price A) = $17.53, E(Price B) = $19.13, E(Price C) = $17.86

B. E(Price A) = $22.82, E(Price B) = $20.65, E(Price C) = $21.58

C. E(Price A) = $20.64, E(Price B) = $20.34, E(Price C) = $21.73

D. E(Price A) = $17.53, E(Price B) = $19.37, E(Price C) = $18.54

E. None of the above