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According to the Bloomberg Network (a Financial TV channel), the current return on the U.S T-bill is 2.8% and the market risk premium is 7.3%.
According to the Bloomberg Network (a Financial TV channel), the current return on the U.S T-bill is 2.8% and the market risk premium is 7.3%. Given this news, in the table below, the only stock that is correctly priced is:
Stock | Beta | Expected Return | ||||
A | .73 | 7.73 | % | |||
B | 1.44 | 12.43 | ||||
C | 1.25 | 12.50 | ||||
D | 1.40 | 11.59 | ||||
E | .80 | 8.64 | ||||
a) stock a b) stock b c) stock c d) stock d e) stock e
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