3. The following financial data relates to the performance of Companys X shares against the market share index over the last three year period:

Year	Market index return (%)	Returns on companys shares (%)
1	8	10
2	10	11
3	12	12

The Treasury bill rate has been stable at 6% per annum over the last three years.

Required:

i). Using the capital asset pricing model (CAPM), determine the expected return for year 4 assuming the market index return for the fourth year is forecasted at 14%.

ii). Advise the fund manager who is planning to use CAPM on its practicability