9. Consider two stocks, A and B. Stock A has an expected return of 13% and a beta of 1.2. Stock B has an expected return of 12% and a beta of 05. The expected market rate of return is 9% and the risk-free rate is 5%. Security would be considered the better buy because alpha is 10. Peachtree Trading Company is expected to have EPS in the upcoming year of $8. The expected ROE is 15.75% An appropriate required return on the stock is 12.75%. If the firm has a plowback ratio of 65%, its intrinsic value should be