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1) What is the beta for stock FARNS? 2) According to CAPM, is stock FARNS underpriced, over priced, or fairly priced You want to identify
1) What is the beta for stock FARNS? 2) According to CAPM, is stock FARNS underpriced, over priced, or fairly priced
You want to identify mispriced assets using the CAPM to plan your investment for the coming year. You came up with the following scenario analysis. The table below includes information on four assets - two stocks FARNS and WORTH, the market portfolio, and the T-bill. In addition, after following all the macroeconomic news, you anticipate a normal market next year with a probability of 45%, and a bear market with a probability of 20%. Market FARNSWORTH T-bill portfolio Bull market 18.91% 23.03% 11.00% 5.60% Normal market 5.76% 15.18% 7.80% 5.60% Bear market -9.60% -12.92% -1.96% 5.60% A. (5 points) What is the beta for stock FARNS? B. (5 points) According to CAPM, is stock FARNS underpriced, overpriced, or fairly priced Step by Step Solution
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