$*$Include Excel file $*1.$ Expected return on two stocks for two particular market returns:

Market Return Aggressive Stock Defensive Stock

$4\%-3\%2\%$

$18\%20\%12\%$

a$.$ What are the betas of the two stocks?

b$.$ What is the expected rate of return on each stock if the market return is $40\%$ likely to be $4\%$ and $60\%$ likely to be $18\%?$

c$.$ If the T$-$bill rate is $2\%$ and the market return is if the market return is $40\%$ likely to be $4\%$ and $60\%$ likely to be $18\%,$ draw the SML for this economy.

d$.$ Which stock is undervalued and which stock is overvalued? Why?

$2.$ DEC Inc. recently hired you as a consultant to estimate the company$$s WACC. You have obtained the following information. $(1)$ The firm's bonds have YTM of $10\%.(2)$ The company$$s tax rate is $30\%.(3)$ The risk$-$free rate is $3\mathrm{.}5\%,$ the market risk premium is $5\mathrm{.}5\%,$ and the stock$$s beta is $1\mathrm{.}35.(4)$ The target capital structure has a debt$-$to$-$equity ratio equals to $1\mathrm{.}5.$ The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC? $*$Include excel file with all workings$*$