20 marks) Consider the CEO of Arbab Kabir Limited" who is trying to tailor the needs of a corporate client. For analytical reasons and tractability of results the CEO is employing the CAPM theoretical model and the following historical stock and market returns. YEAR RW 2013 2014 2015 34% 29% 16% 13% 25% 30% 2796 1 5% 14% 13% 32% 30% 22% 20% 2016 2017 18% Assume that the risk-free rate is 5%, 1. What are the betas of BOA and WF respectively? 2. Are the stocks of BOA and WF aggressive or defensive stocks? 3. What is the slope of the SML line for the BOA and WF stocks respectively? 4. Draw the SML diagram for both stocks and the Market Portfolio and advice the CEO if these stocks are overvalued or undervalued. What are the market risk and the risks of BOA and WF respectively? What is the slope of the CML line for the BOA and WF stocks respectively? 5. hy do we denote it by the term reward/risk ratio? Draw the CML for both stocks 7. Are the expected and the required rates of return for BOA and WF stocks 8. Assume weights 40% for BOA and 60% for wF, what is the beta of the 9. What are the Correlation Coefficients for r(BOA;M) and r(WF:M) respectively? respectively. equilibrium returns? portfolio? Is it an aggressive or a defensive portfolio? Comment on your results analytically