Question
If the market expected return is 10% and the risk-free rate is 1%, which of the following stock(s) is/are overpriced according to the CAPM? What
If the market expected return is 10% and the risk-free rate is 1%, which of the following stock(s) is/are overpriced according to the CAPM?
What is the expected return of a portfolio consisting of 25% of each stock and 25% of risk-free asset?
|
| Current price | Expected 1-yr forward price | Beta |
| Stock A | $10 | $12 | 2 |
| Stock B | $25 | $26 | 0.5 |
| Stock C | $40 | $44 | 1 |
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Corporate Finance Principles And Practice
Authors: Denzil Watson, Antony Head
5th Edition
0273725343, 978-0273725343
