2. 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 retum 8% 16% Beta 0.90 1.10 Risk-free rate Market rate of return 4% 10% 4% 10% 10.64 Pr Pe 9.43 6.25 12.50 E(Ri) 3. Calculate the expected rate of return and beta for the portfolio Stock WD) Beta 1 0.10 2 0.15 3 0.20 4 0.25 5 0.30 0.70 0.90 1.10 6% 8% 10% 12% 14% 1.30 1.50