Problem. 01: You expect an Risk free rate (RFR) of 10 percent and the market return (RM) of 14 percent. Compute the expected return for the following stocks, and plot them on an SML graph. Solution: Problem. 02: You ask a stockbroker what the firm's research department expects for these three stocks. The broker responds with the following information: Plot your estimated returns on the graph from Problem 01 and indicate what actions you would take regarding these stocks. Explain your decisions. Solution