1. Which of the following stocks is overvalued/undervalued? Compute the expected and required values Graph the Security Market Line and plot Stock A, Stock B, the market and the risk-free rate Stock A Stock B Expected return Beta 10% 0.80 14% 1.20 Risk-free rate Market rate of return 6% 12% 6% 12% 2. Calculate the expected rate of return and beta for the portfolio Stock W(i) Beta E(Ri) | | 0.10 | 0.05| 7% 2 | 0.15 | 0.70 | 9% 3 | 0.20 | 0.80 | 10% 4 | 0.25 | 1.00 | 11% 5 | 0.30 | 1.10 | 12%