An analyst has provided you with the following information about the common shares of two companies. $(10$ marks$)$

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Common Shares $$East Ltd$$ West Ltd

Required rate of return $16\%12\%$

Risk$-$free rate of return$3\%3\%$

Standard deviation of return $12\%14\%$

Market risk premium$10\%10\%$

Beta $1\mathrm{.}50\mathrm{.}75$

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a$)$ Calculate the expected return for each company using the capital asset pricing model $($Use $4$ decimal places$)(6$ marks$)$

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b$)$ Using the information about the companies provided above, along with your calculation in part a$)$ Indicate whether a well$-$diversified investor would prefer to invest in the shares of$$East Ltd$.$ or the shares of West Ltd$.$ Explain why. $(4$ marks$)$