Finance The risk-free rate is 3.7 percent and the expected return on the market is 12.3 percent. Stock A has a beta of 1.1 and an expected return of 13.1 percent. Stock B has a beta of .86 and an expected return of 11.4 percent. Are these stocks correctly priced? Why or why not? Use E(Ri) = Rf + βi(E(RM) − Rf).

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A: Stock AStock BProbabilityReturnProbabilityReturn0.3513%0.15-6%0.3014%0.357%0.3518%0.3516%0.1520%

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A: Since you have posted multiple questions, we will provide the solution only to the first question as…

Q: c) Assume that using the Security Market Line (SML) the required rate of return (Ra) on stock A is…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

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A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

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A: Calculation of Expected Return for Stock A:

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A: To find λ1 and λ2, we'll use the given equations and the provided information.

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A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

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