1) a) Fill in the 8 missing values in the table.

Security	Expected Return	Standard Deviation	Correlation*	Beta
Firm A	.105	.31	=_______	.85
Firm B	.148	=_______	.50	1.40
Firm C	.160	.65	.35	=_______
Market Portfolio	.120	.20	=_______	=_______
Riskfree asset	.050	=_______	=_______	=_______

* with the market portfolio

b) According to the CAPM, Is the stock of Firm A correctly priced (check the correct box)?

Yes No (the stock is overpriced) No (the stock is underpriced)

c) According to the CAPM, Is the stock of Firm B correctly priced (check the correct box)?

Yes No (the stock is overpriced) No (the stock is underpriced)

d) According to the CAPM, Is the stock of Firm C correctly priced (check the correct box)?

Yes No (the stock is overpriced) No (the stock is underpriced)