Gunung Ledang Berhad, a large foreign mutual fund, is considering investing stocks in Bursa Malaysia. One of the portfolio managers, Encik Tuah, has identified two stocks, Puspa Berhad and Kemala Berhad, which have great potential and are considered as blue$-$chip stocks. As a new investor in the local market, Encik Tuah approached you to advise him on which one of the two stocks should be selected. He provides you with the following information for analysis:

$\backslash$table$[[$State of economy,$\backslash$table$[[$Probability of$],[$occurrence$]],$Rate of return on stock $(\%)],[,,\backslash$table$[[$Puspa$],[$Berhad$]],\backslash$table$[[$Kemala$],[$Berhad$]]],[$Strong$,0\mathrm{.}20,(15),20],[$Normal$,0\mathrm{.}50,20,30],[$Weak$,0\mathrm{.}30,60,40]]$

The market risk premium is $8\%,$ and the risk$-$free rate is $4\%.$

From the above information you are required to answer the following questions.

a$.$ Compute for each stock's the expected rate of return.

$(2$ Marks$)$

b$.$ Based on your computation in part $($a$),$ determine each stock's beta value.

$(4$ Marks$)$

c$.$ Based on your findings in part $($b$),$ decide which stock that you will recommend to Encik Tuah. Explain your answer.

$(4$ Marks$)$