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Condition Probability Grn Bond Stock A Stock B Market Recession 0.1 8.0% -22% 28% -13% Below average 0.2 8.0% -2% 14.7% 1% Average 0.4 8.0%
Condition | Probability | Grn Bond | Stock A | Stock B | Market |
Recession | 0.1 | 8.0% | -22% | 28% | -13% |
Below average | 0.2 | 8.0% | -2% | 14.7% | 1% |
Average | 0.4 | 8.0% | 20% | 0% | 15% |
Above average | 0.2 | 8.0% | 35% | -10% | 29% |
Boom | 0.1 | 8.0% | 50% | -20% | 43% |
Expected Return |
| 8% | 17.4% | 1.74% | ? |
Standard Deviation |
| 0% | ? | 13.36% | 15.34% |
Beta |
| 0 | 1.29 | ? | 1 |
Required:
Construct the SML of the above four alternative. Clearly indicate stock A and stock B have been under/over or fairly priced. [TOTAL:
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