Question
A stock is expected to offer a return of 15%. Its beta is 2. The risk-free rate is 2%, and the expected rate of return
A stock is expected to offer a return of 15%. Its beta is 2. The risk-free rate is 2%, and the expected rate of return on the market portfolio is 10%. According to the Capital Asset Pricing Model, what is the fair amount of the expected return on the stock? Is it underpriced or overpriced?
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A Fast And Frugal Finance
Authors: William P. Forbes, Aloysius Igboekwu, Shabnam Mousavi
1st Edition
0128124954, 978-0128124956
