A security analyst at CIBC securities has summarized information on three firms and the market as follows. The risk free rate is 4%, the market risk premium (E(Rm) - Rf) is 6%, and the standard deviation of returns of the market portfolio is 25%.

	Security A	Security B	Security C
Correlation with market portfolio	0.70	0.75	0.55
Standard deviation of security returns	35%	50%	50%
Estimated Security Returns	See part B	13%	10%

PART A

Determine the CAPM expected or required rate of return for securities A, B and C using the information given above, and enter your answer below as a percentage to two decimal places.

Expected return of Security A is

Expected return of Security B is

Expected return of Security C is

PART B

Security A is currently trading at $25. The CIBC analyst has estimated that the price of Security A in one year can reach $30, $28, or $25 with probabilities 25%,50% and 25% respectively.

Calculate the estimated one year return for security A (express your answer as a percentage to 2 decimal places and do not round intermediate steps).

Estimated one year return for security A is

PART C

Use the following three terms --> " Over Priced " , " Under Priced ", or " Fairly Priced " to describe security A, B and C below.

Security A is

Security B is

Security C is