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stock QUESTION FIVE Stock A Stock B Market Portfolio Economy Recession Probability 0.1 -22% 28% -13% mpromo 12 0.2 -2% 14.7% 1% Below average Average Above average 0.4 20% 0% 15% 0.2 2.2295944 2,63092 35% -10% 29% Boom 0.1 50% -20% 43% Page 7 of 10 yube 200 EAL 1.74% Expected ? 15% Return Variance A01.44% ? 235.2% Beta 1.29 -0.86 ? Required Return 17.08% ? 15% Required: A. Draw the Security Market Line (SML) utilising the CAPM clearly indicating the above two stocks, market portfolio as well as the 5% T-Bill rate. (10 Marks) B. Plot the two stocks expected return and clearly show whether each is undervalued, properly valued or overvalued. (10 Marks)