1.76points

Item 10

The risk-free rate is 7% and the expected rate of return on the market portfolio is 11%.

a. Calculate the required rate of return on a security with a beta of 1.92. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. If the security is expected to return 15%, is it overpriced or underpriced?

multiple choice

• Overpriced
• Underpriced