Question 13 Required: (a) Suppose that the risk premium of the market portfolio is estimated to be 13% and we estimate the beta for Apple, Inc. (AAPL) to be 0.87. If the risk-free rate on the T-bill is 5%, calculate the expected return for Apple, Inc. Does Apple employ a bearish or bullish strategy based on the information given? Justify your answer. (5 marks) (b) The following figure contains information based on analyst's forecasts for three stocks. Assume a risk-free rate of 7% and a market return of 15%. Compute the expected and required return on each stock, determine whether each stock is undervalued, overvalued or properly valued and outline the appropriate trading strategy. (15 marks) Stock B Elprice) (Dividend) Price Today () in 1 year () in 1 year () 25 27 1.00 40 45 2.00 15 17 0.50 Beta 1.0 0.8 1.2 (Total: 20 marks)