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Keith hoids a portfolio that is invested equally in three stocks (wD=wA=w1=1/3 ). Each stock is described in the following table: An analyst has used

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Keith hoids a portfolio that is invested equally in three stocks (wD=wA=w1=1/3 ). Each stock is described in the following table: An analyst has used market- and firm-5pecific information to make expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns. The risk-free rate [r2F] is 6%, and the market risk premium [RPM] is 4%. Use the following graph with the security market line (SML) to plot each stock's beta and expected return. (Note: Click on the points on the graph to see their coordinates.) A stock is in equilibrium if its required return its expected return. In general, assume that markets and stocks are in equilibrium (or fairly valued), but sometimes investors have different opinions about a stock's prospects and may think that a stock is out of equelibrium (either undervalued or overvalued). Based on the analyst's expected return estimates, stock iNO is , stock AtL is in equilibrium, and stock DET is

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