3) You expect a risk free rate of 8% and a market risk premium of 6%. You ask a stockbroker what the firms research department expects for stocks U, N, and D. The broker responds with the following information:

Stock	Beta	Current Price	Expected Price	Expected Dividend
U	0.70	25	27	1.00
N	1.00	40	42	1.25
D	1.15	33	40	1.00

Compute the expected & required return for these three stocks, and plot them on an SML graph. Indicate what actions you take with regard to these stocks. Discuss your decisions.