A has beta of 0.4 & the cost of equity is 10% while. B has a beta of 1.2 & the cost of equity is 18%, find out risk free rate and market rate return?

it is quite simple problem . based on the CAPM ( capital assets pricing model) model. if we put all value given in the question  , we can get the risk free rate of return and market rate of return as6%,16%.

Ko= Rf+β(Rm-Rf)

Ko= cost of capital

Rf=risk free rate

β=bata

Rm= market rate of return.

So if we put the given value in  the formula, equate with it, we can get the desired value which has been asked in the question to determined. as6% and16%.. Please check