Use the information given below to determine if the following securities are correctly priced, assuming that Rf = 7% and Rm = 13%.

A B C

Current price (P0) $50 60 100

Next year price (P1) $54 72 110

Dividend (D1) $4 6 5

Beta 1.5 2.0 3.0

If you were offered a 30-30-40

portfolio of the above securities as a package deal, will you take it? Why?

Thank you!