Question
72. The risk-free rate is 5 percent. The expected market rate of return is 11 percent. If you expect stock X with a beta
72. The risk-free rate is 5 percent. The expected market rate of return is 11 percent. If you expect stock X with a beta of 2.1 to offer a rate of return of 15 percent, you should A. buy stock X because it is overpriced. B. sell short stock X because it is overpriced. C. sell stock short X because it is underpriced. D. buy stock X because it is underpriced. E. none of the above, as the stock is fairly priced.
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Investments Analysis and Management
Authors: Charles P. Jones
12th edition
978-1118475904, 1118475909, 1118363299, 978-1118363294
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