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You plan to invest your cash of $150,000 in GF and DSA securities. According to experts, the forecast for the next year is: * Rate

You plan to invest your cash of $150,000 in GF and DSA securities. According to experts, the forecast for the next year is: * Rate of return of the market portfolio 15% * Rate of return on treasury bills 9% * Standard deviation of market portfolio returns 4.5% *Beta coefficient of GF stock 0.75 *DSA security beta coefficient 0.85 * The covariance between the returns of GF and DSA securities 0.0018 * Expected rates of return and standard deviations of returns for DSA and GF securities are:

Expected return

Titre GF

Titre DSA

Rendement espr

12.40%

13.25%

Standard deviation of returns

3%

6%

What is the required return on GF security

Is the GF title overvalued, undervalued or correctly valued? Justify your answer.

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