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(a) You are considering the following four stocks for investment, A, B, C and D. You have analyzed them and come up with the following

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(a) You are considering the following four stocks for investment, A, B, C and D. You have analyzed them and come up with the following information. B CI A B D Market Risk-free rate 1.1 0.9 1.3 1.2 Expected return 10.2% 10.1% 11.8% 11.4% 10.0% 4.0% Assuming your analysis is valid: (i) Please determine for each of the stocks whether they are under or overvalued. (4 marks) (ii) Which stock is riskiest? Why? (2 marks) (iii) What is the required return for a portfolio of all four stocks comprising A (20%), B (25%), C (35%) and D (20%)? (2 marks) (iv) What is the expected return for an equal-weighted portfolio of only the undervalued stocks

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