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An analyst collected the following data for three possible investments. Where the expected return on the market is 12% and the risk-free rate is 4%.

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An analyst collected the following data for three possible investments. Where the expected return on the market is 12% and the risk-free rate is 4%. According to the security market line (SML), which of the three * ?securities is correctly priced Stock Price Today Forecast Price* Alpha 25 31 Omega 105 110 Lambda 10 10.80 * Expected price one year from today, Dividend 2 1 Beta 1.6 1.2 0.5 0 Lambda. Omega Alpha 1, Using the following assumptions, calculate the rate of return on a margin transaction for an investor who purchases the stock and the stock price at * which the investor would have received a margin call Market Price Per Share: $32 Number of Shares Purchased: 1,000 Holding Period: 1 year Ending Share Price: $34 Initial Margin Requirement: 40% Maintenance margin: 25% Transaction and borrowing costs: $0 . The company pays no dividends Margin Return is 6.3%; Margin Call price is $25.60 Margin Return is 15.6%; Margin Call price is $25.6 Margin Return is 15.6%; Margin Call price is $17.07

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