Problem 7-04 Based on five years of monthly data, you derive the following information for the companies listed: oi rim 11.00% 0.61 Company Intel Ford Anheuser Busch Merck S&P 500 a; (Intercept) 0.21 0.11 0.18 0.03 16.00 8.90 0.36 0.56 0.78 9.90 0.00 5.00 1.00 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 14 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 - 16 percent Anheuser Busch 17 percent Merck - 11 percent . The correct graph is -Select- A. Security market Line E(RI) SML *AB 0.18 0.16 Tntel word Rm 0.14 0.12 * Merck 0.1 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 E(Ri) SML 0.18 Ford *AB - 0.16 Rm 0.14 0.12 * Merck 0.1 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 E(Ri) SML 0.18 *Intel *AB 0.16 *Ford Rm0.14 0.12 *Merck 0.1 0.08 0.06 0.04 0.02 -0.2 0.2 0.4 0.6 0.8 i 1.2 1.4 1.6 1.8 Beta Couritsmorot Line D. Security market Line E(RI) 0.18 SML Ford * Merck 0.16 * Intel 0.14 Rm 0.12 * 0.1 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 Which stocks are undervalued or overvalued? Evaluation Company Intel -Select- -Select- Ford Anheuser Busch -Select- Merck -Select