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An analyst has provided you with the following information about the common shares of two companies Kingston Ltd. and Mobay Ltd. Common Shares Kingston Ltd

An analyst has provided you with the following information about the common shares of two companies Kingston Ltd. and Mobay Ltd.

Common Shares Kingston Ltd Mobay Ltd Required rate of return 9% 10% Risk free rate of return 3% 3% Standard deviation of return 17% 13% Market risk premium 6.5% 6.5% Beta 0.75 1.25

a) Calculate the expected return for each company using the capital asset pricing model.

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