Question
ABC Co. has a rate of return of 14.5% with a beta of 1.4. The risk-free rate is 5% and the market expected rate of
ABC Co. has a rate of return of 14.5% with a beta of 1.4. The risk-free rate is 5% and the market expected rate of return is 10%. This security is ___________ relative to what the CAPM predicts.
a. underpriced
b. overpriced
c. fairly priced
d. None of the above are correct.
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Investments An Introduction
Authors: Herbert B Mayo
10th Edition
0538452099, 9780538452090
