Dinner Foods Stock Has a Beta of 1

Multiple Choice

Dinner Foods stock has a beta of 1.55 and an expected return of 15.43 percent. Edwards' Meals stock has a beta of .95 and an expected return of 10.27 percent. Assume that both stocks are correctly priced. Given this, the risk-free rate is _____ percent and the market rate of return is _____ percent.

A) 2.02; 11.53
B) 2.09; 12.35
C) 2.10; 11.53
D) 2.26; 12.35
E) 2.10; 10.70