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Currently the risk-free rate is 6% and the expected return on the market portfolio is 11%, the expected return for 3 stocks as priced in
Currently the risk-free rate is 6% and the expected return on the market portfolio is 11%, the expected return for 3 stocks as priced in the market are listed below with their estimate of beta. . Stock ... Expected Return ..... Beta X .................... 14% .............. 1.5 Y .................... 12% .............. 2.0 Z .................... 10% .............. 0.8 . Which of these stocks is overpriced? . A. X B. Y C. Z D. None, they are all fairly priced. E. None, they are all underpriced.
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