$(19$ points $-$ Stock Valuation$)$ Today's date is Monday, January $3,2023.$ The following information pertains

to the stocks of two fictitious companies, ABC and DEF on January $3,2023.$

The long$-$term Treasury yield is $3\%,$ and the historical average market return is $12\%.$

$($a$)(2$ points$)$ Calculate the required rate of return of the stock ABC.

$($b$)(5$ points$)$ Assessing from the dividend stream, is ABC undervalued or overvalued? Show your work and

explain.

$($c$)(4$ points$)$ Calculate total annual return from the stock. Assessing from the total annual return, is ABC

undervalued or overvalued? Show your work and explain.

$($d$)(5$ points$)$ Suppose the Treasury Bond Yield rate increases, how would this affect your valuation of

ABC $?$ Explain.

$($e$)(3$ points$)$ Assessing from the dividend stream, is DEF undervalued or overvalued? Briefly explain.