Question: Here are data on two companies. The 10-year treasury note rate is 4% and the market risk premium using treasury note is 6% Company Texas

Here are data on two companies. The 10-year treasury note rate is 4% and the market risk premium using treasury note is 6%

Company

Texas

Boston

Forecasted return

14%

15%

StD of returns

8%

10%

Beta

1.5%

1.0

a. Estimate the expected return for each company according to CAPM

b. Characterize each company as underpriced, overpriced, or properly priced according to CAPM

c. Compare each companys total risk and market risk (which one is greater)

please explaiin each steps.show steps

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