Problem 7-04 Based on five years of monthly data, you derive the following information for the companies listed: 01 TIM a) (Intercept) 0.22 0.65 0.30 Company Intel Ford Anheuser Busch Merck S&P 500 0.09 0.15 13.40% 13.10 8.10 8.20 5.00 0.06 0.63 0.64 1.00 0.00 a. Compute the beta coefficient for each stock. Do not round intermediate calculations. Round your answers to three decimal places. Intel: Ford: Anheuser Busch: Merck: b. Assuming a risk-free rate of 8 percent and an expected return for the market portfolio of 13 percent, compute the expected (required) return for all the stocks. Do not round intermediate calculations. Round your answers to two decimal places. Intel: % Ford: % Anheuser Busch: % Merck: % C. Choose the correct SML graph for the following estimated returns for the next year. Intel - 18 percent Ford - 14 percent Anheuser Busch 17 percent . Merck - 9 percent . The correct graph is graph Cv The correct graph is graph Cv A. Security market Line E(RI) *AB 0.18 SML 0.16 *Intel 0.14 Rm - Ford 0.12 0.1 *Merck 0.08 0.06 0.04 0.02 -0.2 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8 Beta B. Security market Line DOLU B. Security market Line E(RI) 0.18 SML Ford *AB 0.16 Rm0.14 0.12 0.1 *Merck 0.08 0.06 0.04 0.02 -0.2 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8 Beta C. Security market Line C. Security market Line E(Ri) 0.18 *Intel SML *AB 0.16 0.14 Rm I - Ford 0.12 0.1 Merck 0.08 0.06 0.04 0.02 -0.2 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8 Beta -0.2 U.2 0.4 0.5 1.b 1.8 Beta D. Security market Line E(RI) 0.187 Ford * Merck 0.16 SML 0.14 *Intel Rm0.121 0.17 0.1 0.081 0.06 0.04 0.02 -0.2 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8 Beta Which stocks are undervalued or overvalued? Company Evaluation Intel -Select- -Select- V Ford Anheuser Busch Merck -Select -Select