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Below you are given information for three companies General ModernMedia, E-Z Drive Cars Company Weedkillers Inc. Forecasted Return 12.8% 12.7% 13.5% Beta 1.2 1.15 1.39

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Below you are given information for three companies General ModernMedia, E-Z Drive Cars Company Weedkillers Inc. Forecasted Return 12.8% 12.7% 13.5% Beta 1.2 1.15 1.39 Assume the T-Bill rate is 8% and the return on the market is 12%. A. What would be the return for each company according to the CAPM? Show your calculations. 6 Points B. Is each company correctly priced? Explain. 4 Points " B I I 1

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