Market Retur 6% 20% 296 30% 8% 16% e following table gives an analysts expected return on two stocks for particular market returns: What are the betas of the two stocks? [2 marks] ii. What is the expected return on each stock if the market return is equally likely to be6% or 20%. [2 marks] iii. If the risk free rate is 7% and the market return is equally likely to be 6% or 20%, what is the Security Market Line? [2 marks Based on the above which stock will be over- valued; which stock will be under- valued above security market line? Explain investors' reactions to the situation. [5 marks he CAPM model 28 arts M1 6% 20% 30% 16% The folowing table glives an analyss' expected return on two stociks for particular market returns What are the betas of the two stocks? [2 marks) i. What is the expected return on each stock if the market return is equally likely to be6% or 20%. [2 marks] iii. If the risk free rate is 7% and the market return is equally likely to be 6% or 20%, what is the Security Market Line? [2 marks Based on the above which stock will be over- valued; which stock will be under- valued above security market line? Explain investors' reactions to the situation. [ 5 marks