7. Based on their present share prices and expected future dividends, Bosco Enterprises, Target Markets, Inc., and Selby Glass Company have expected returns of 16 percent, 14 percent, and 20 percent, respectively. The risk-free rate presently is 7 percent. Required returns on investment are determined according to the following factor model:

The reaction coefficients for the companies are as follows:

Eosco .SO .20 Target .I0 1.10 Selby 1.20 .40