1. Assume the risk-free rate of return is 3% and the market rate of return is 12%. Two companies, ABC and XYZ have the following data.

		ABC	XYZ
Beta		1.2	1.6
Current share price (NYSE)		$35.25	$17.50
Dividend just paid, per share		$2.00	$2.00
Growth rates	Year 1	14%	6%
	Year 2	12%	6%
	Year 3	11%	6%
	Year 4	10%	6%
	Year 5	8%	6%
	Year 6 +	6%	6%

Make the necessary analyses and determine if you would include or not include these companies in your investment portfolio.