Question 1 (25 Marks) a) Jewel Cases Limited a member of the Jamaica Stock Exchange has been highly recommended by a stockbroker to three clients, Mary National, Mark Country and Paul Green. The respective required rates of return of the three clients are 12%, 12.5% and 13%. The Jewel Cases stock sells for $150.50 and pays a quarterly dividend of $150 with a projected growth dividend rate of 8% Given the information calculate the valuation of the stock for the three clients and indicate the percentage over/under value for each client (9 marks) Question 2 (25 Marks) Link Investments Limited, the company that you incorporated two years ago was selected by Norman Frank for investment advice. Frank provided you with data, which be received from a friend but was unable to use it due to his limited knowledge of finance Given that the risk-free rate of interest is 6%, the market rate of retum is 12% and the standard deviation of the market is 50%. Using the data in the table, provide the values and analysis for Frank Stock % of Portfolio COV (RR) Current Expected Expected Price Price Dividends SNB 20% 0.175 25 27 0.50 BMM 30% 0.25 40 42 0.50 TTR 0.2875 33 39 1.00 MFJ 25% 0.35 64 65 1.10 VCT 10% -0.075 50 54 15% a) Calculate the beta for each stock (5 Marks) b) Calculate the estimated return for each stock. (5 Marks) c) Calculate the required return for each stock (5 Marks) d) Calculate the alpha for each stock, then advice Frank if the stocks are underpriced or overpriced and what possible action to be taken based on these results. (5 Marks) c) Using the values from (b) above calculate the estimated return of the portfolio consisting of all five stocks (2 Marks) Using the values from a) above calculate the beta of the portfolio consisting of all five stocks. Comment on the results