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You expect an RFR of 8 percent and the market return (R) of 13 percent. Compute the expected return for the following stocks. Round your

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You expect an RFR of 8 percent and the market return (R) of 13 percent. Compute the expected return for the following stocks. Round your answers to two decimal places. Stock Beta E(R) 0.70 N 1.25 % D -0.15 % U % Choose the correct SML graph. The correct graph is -Select- A. Security market Line E(RI) 0.18 0.16 0.14 SML Rm 0.12 0.17 0.08+ 0.06 0.04 0.02 -0.2 0.2 0.4 0.6 0.8 1.2 1.4 Beta -0.6 -0.4 -02 + 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line B. E(RI) 0.18 0.167 SML 0.14 Rm N 0.121 0.1 0.00 10.06 0.04 0.02 -0.6 -0.4 -0.2 1 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line C. E(RI) 0.18+ 0.161 SML Rm 0.14 0.12 0.6 -0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line c . E(RI) T 0.187 0.16 SML Rm 0.14 0.121 . N 0.1 0.08 D0.06 0.04 0.02 -0.6 0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line D. E(RI) 0.187 0.16 0.14 N SML 0.127 D. Security market Line E(RI) 0.18 0.16 0.14 SML 0.12 Rm 0.1 0.081 0.00 0.04 0.02 -0.6 -0.4 -0.2 0.2 0.4 0.6 0.8 1.4 Beta b. You ask a stockbroker what the firm's research department expects for these three stocks. The broker responds with the information below. Indicate what actions you would take with regard to these stocks. Round your answers to two decimal places. Stock Current Price Expected Price Expected Dividend Estimated Return Evaluation U 27 30 0.70 -Select- N 43 1.85 % % % 45 -Select 31 34 1.30 -Select- If you believe the appropriateness of these estimated returns, you would buy Select and sell -Select- Choose the correct SML graph. Note that labels with asterisk denote estimated returns. The correct graph is -Select- A. Security market Line E(RI) 0.18 0,16 0.14 SML Rm 0.12 0.1 D 0.08 N 0.06 0.04 0.02 -0.6 -0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line B. E(RI) 0.18 0.16 SML . 0.14 -0.6 -0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line B. E(RI) 0.181 0.16 SML 0.147 RmD N 0.127 U 0.1 0.00 N D0.06 0.04+ 0.027 -0.6 -0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line C. E(RI) 0.181 0.16 SML Rm. 0.14 C. Security market Line E(RI) T 0.187 0.16 SML U Rm. 0.14 *D 0.12 2. N 0.1 0.08 D0.06 N 0.04 0.021 -0.6 -0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line D. E(RI) 0.181 0.161 0:14 SML 0.121 U Rm U.94 -0.6 -0.4 -0.2 1.2 1.4 Beta 0.2 0.4 0.6 0.8 Security market Line D. E(RI) 0.187 0.16 . 014 SML 0.121 U Rm 0.1 0.08 0.00 0.04 0.02 -0.6 -0.4 -0.2 0.2 0.4 0.6 0.8 1.2 1.4 Beta

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