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You ask a stockbroker what the firm's research department expects for the three (3) stocks above, that is, Stock X, Y and Z. The broker

You ask a stockbroker what the firm's research department expects for the three (3) stocks above, that is, Stock X, Y and Z. The broker responds with the following information: Stock X Current Price 22 Expected Price 24 Y 48 Z 37 59 51 40 Expected Dividend 0.75 2.00 1.25 Required: B. Calculate the estimated future rate of return for Stock X, Y, and Z. (6 marks) C. Determine which stock is overvalued, undervalued, properly valued, and state why. (3 marks) D. Illustrate with the use of the Security Market Line (SML) how Stock X, Y and Z would appear on it

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