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my subject is financial management c. John has been asked to estimate the required...

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Accounting

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my subject is financial management

c. John has been asked to estimate the required rate of return for different investment opportunities, M Incorporation and S Incorporation. A local brokerage firm estimates that beta for M Inc's stock is 0.55, beta for S Inc's stock is 1.19, the expected risk free rate of return is 6% and that investors require a return of 11% from the market. i. Based on this information, calculate required rate of return for M Inc and S Inc? ii. If the estimated return of M Inc is 15% and of S Inc is 8%, Calculate excess return of respective securities, draw Security Market line for representing them and further describe the decision taken based on undervaluation and overvaluation

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