Nile Food’s stock has a beta of 1.4, while Elba Eateries’ stock has a beta of 0. Assume that the risk-free rate, rRF, is 5.5% and the market risk…

Nile Food’s stock has a beta of 1.4, while Elba Eateries’ stock has a beta of 0.7. Assume that the risk-free rate, rRF, is 5.5% and the market risk premium, (rM – rRF), equals 4%. Which of the following statements is CORRECT?