investment

Based on your understanding of CAPM, determine which stock (s) is/are undervalued, overvalued, and fairly priced if the risk-free rate is 7% and the market risk premium is 10%. Draw the security market line and the position of the four stocks. Stock Current Price Expected Price (Rp) Next Year (Rp) Expected Dividend Beta ABCD 600 630 60 0.8 700 745 75 1 800 860 90 1.2 900 980 100 1.4 Based on your understanding of CAPM, determine which stock (s) is/are undervalued, overvalued, and fairly priced if the risk-free rate is 7% and the market risk premium is 10%. Draw the security market line and the position of the four stocks. Stock Current Price Expected Price (Rp) Next Year (Rp) Expected Dividend Beta ABCD 600 630 60 0.8 700 745 75 1 800 860 90 1.2 900 980 100 1.4