Question
GoodBuy stock has a beta of 2.5. The expected return on GoodBuy is 28.75%, while the expected return on the market portfolio is only 14%.
GoodBuy stock has a beta of 2.5. The expected return on GoodBuy is 28.75%, while the expected return on the market portfolio is only 14%. The risk-free rate is 3%. Because GoodBuy lies __________ the SML, it is considered __________.
1 - below; overpriced
2 - below; underpriced
3 - above; underpriced
4 - above; overpriced
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ISE Essentials Of Investments
Authors: Zvi Bodie, Alex Kane, Alan Marcus
12th International Edition
1265450099, 9781265450090
