The rate of return for market portfolio FBM KLCI is 16%. You are given the following information. Crafty stock: Current price is $11, analyst's forecast of future price and dividend are $12 and $0.3 respectively. Beta value is 0.45 and the stock's risk premium is 2.25% Witty stock: Current price is $18, analyst's forecast of future price and dividend are $22 and $0.85 respectively. The stock's risk premium is -0.5%

1) Calculate the beta value of Witty?

2) Calculate the required rate of returns of Crafty?

3) Calculate the required rate of returns of Witty?

4) if you are using CAPM for strategic investment decisions, which of these two stocks would you purchase? Provide your rationale.