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Hero
HDFC Portfolio
Motocrop
Expecetd return 27.0% 18.4% 23.6%
CAPM Return 15.4% 13.4% 21.8%
Beta Return
1.0812 15.4%
0.8126 13.4%
0.9738 21.8%
0 7.27%
2.63 27%
1.48 18.4%
1.93 23.6%
Return
30.0%
27.0%
25.0% 23.6%
21.8%
20.0% 18.4%
Rate of Returns
15.4%
15.0% 13.4%
10.0%
7.3%
5.0%
0.0%
0 0.5 1 1.5 2 2.5 3
Beta
Note: From the above SML graph it is seen that the stocks of HDFC Bank Ltd, Hero Motocrop Ltd and the
Portfolio are undervalued.