You have been provided by the following information regarding stocks A, B and C. Also,

consider the RFR (Rf) as 10% and the market return as (Rm) 14%

Stock Beta coefficient Beginning Price Ending Price Dividends

A 0.95 24 26 0. 85

B -0.30 39 42 1.35

Workout the following requirements.

1. The required rate of return for each stock

2. The estimated rate of return for each stock

3. Based on your answers of requrenet1 I and 2 above, identify which stock is overpriced or

underpriced and why. Also, based on such identification, what would be your decision for

each stock (buy or sell)