Assume that the financial markets are in equilibrium. Information on t

Assume that the financial markets are in equilibrium. Information on three particular stocks is provided in the table below. Find the risk free rate and the expected return on the market portfolio.

Asset Expected Return Beta
A 7.6% 0.2
B 12.4% 0.8
C 15.6% 1.2

A) 5%, 14%
B) 5%, 18%
C) 6%, 14%
D) 6%, 18%
E) 7%, 16%

ANSWER

C