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Question 3 (Total 12 marks) ai(intercept) oi Tim 0.22 12.10% 0.72 Intel Ford 0.1 14.60% 0.33 Anheuser Busch 0.17 7.60% 0.55 Merck 0.05 10.20% 0.6

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Question 3 (Total 12 marks) ai(intercept) oi Tim 0.22 12.10% 0.72 Intel Ford 0.1 14.60% 0.33 Anheuser Busch 0.17 7.60% 0.55 Merck 0.05 10.20% 0.6 S&P 500 (the market portfolio) 0 5.50% 1 Required: a. Compute the beta coefficients for Intel, Ford, Anheuser Busch and Merck. (8 marks) b. Assuming a risk-free rate of 8 percent and an expected return for the market portfolio of 15 percent, compute the expected return for all the stocks. (4 marks)

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