You are an investment advisor who believes that the capital asset pricing model will hold in the long run for all stocks. You have current holdings of two stocks, A and B, with the following characteristics: Stock Expected Return Beta A 14% 1.2x B 18% 2.9x The current risk-free rate is 4% and the expected return on the market is 10%. Required: (a) For each of these stocks i) show that they are or are not in equilibrium, ii) are over-priced or under-priced and iii) indicate how you would change your holdings (i.e. would you sell or buy more?) (b) For Stock A only, calculate the price you would be willing to pay assuming the most recent dividend was $1.50 and the growth rate is 9%