The Management of Miracle Company Ltd is planning to launch two products as per the information below:

Product A has a Beta of 1.5.

Product B has a Beta of 1.2

Government bonds are currently trading at 6%.

The average return than investors in the market can expect is 14%.

(a)Calculate the Cost of Equity using CAPM for each company.

(b)Advice the management of Miracle company Ltd how the capital asset pricing model can assist in making a better investment decision with respect to its new product launch your response should include systematic, business and financial risk.

A stock has the following probability distributions of expected returns. Calculate the risk per unit return.

PROBABILITY	Y%
0.2	15
0.1	2
0.2	(10)
0.4	35
0.1	20