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Suppose you obtain the betas and expected returns for the following five companies. Company Beta Required Return Caterpillar .98 13.00% Harley-Davidson 1.55 18.62% The Hershey

Suppose you obtain the betas and expected returns for the following five companies. Company Beta Required Return Caterpillar .98 13.00% Harley-Davidson 1.55 18.62% The Hershey Co. .24 3.55% Pfizer .64 8.15% The risk-free rate is 1.40% and the expected return on the market portfolio is 12.50%. a. Compute the expected rate of return for each stock. Show your calculations. (5 Points) b. Is each stock referenced in this question in equilibrium? Explain. (5 Points)

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