1. You have analyzed the following four securities and have estimated each securitys beta and what you expect each security to return next year. The expected return on the market portfolio is 13%, and the relevant risk-free rate is 5.5%.

   Security	Beta	Expected return (based on your analysis)
   A	1.30	14.0%
   B	0.85	12.5%
   C	0.20	7.0%
   D	2.10	28.0%

   Based on your analysis, which of the securities is overpriced?

   		A) Security A
   		B) Security B
   		C) Security C
   		D) Security D