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The following information are available to you as a portfolio manager. You expect a Treasury Bill rate of 1.9 percent, an FBMKLCI return and standard
The following information are available to you as a portfolio manager. You expect a Treasury Bill rate of 1.9 percent, an FBMKLCI return and standard deviation of 4.5 percent and 6 percent, respectively. By using SML: a) calculate the expected return for each stock and identify the relationship of the respective expected returns and SML (8 marks) b) determine which stock is undervalued, overvalued, and fairly valued and possible actions can be taken for the respective stocks (5 marks) c) based on your answer above, sketch and plot the SML
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