a) Assume that the return on the market is 14 percent and the risk-free rate is 8 percent. Use the CAPM to determine whether the following stock A and D are overpriced or under-priced

b) A financial analyst is analysing two financial alternative X and Z (3+3=6 marks) Their rates of return under diferrent probabilites are shown below PROBABILITY RATE OF RETURN FOR Y RATE OF RETURN FOR Z 0.20 22% 5% 0.60 14% 15% 0.20 -4% 25% For Y and Z calculate the expected return, standard deviation and coeifficent of varation (2+3+2=7 marks)

c) You are buying your first house for $220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining $190,000 30year mortgage with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?