You estimate the Fama-French 3-factor model for the two stocks and find the following coef- ficients. You also estimate risk premiums for each factor. Calculate the expected return for each company using the 3-factor model.

1. You are given the following information about two stocks, the market index and the risk free rate. The forecasted returns are based on your own research and are not the expected returns based on CAPM. StocksForecasted Return Standard Deviation Beta IBM CSCO Market 14% 19% 14% 5% 36% 25% 15% 0.8 1.5 Risk-free