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You are evaluating stocks of two companies. Company A is currently trading at Rs . 6 0 and Company B at Rs . 1 1

You are evaluating stocks of two companies. Company A is currently trading at Rs.60 and Company B at Rs.112. You expect that price of both stocks will increase by Rs.14 next year. Assume no dividends. A has a beta of 1.2 and B has a beta of -0.6. If the market return is 18%, and the risk-free rate of return is 8%, how will you make an investment decision? Explain. (5marks)

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