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Need help figuring out C! Will leave like! Thank you!! Suppose the rate of return on short-term government securities (perceived to be risk-free) is about
Need help figuring out C! Will leave like! Thank you!!
Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 7%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 14%. According to the capital asset pricing model: Required: a. What is the expected rate of return on the market portfolio? Note: Round your answer to 2 decimal places. b. What would be the expected rate of return on a stock with =0 ? Note: Round your answer to 2 decimal places. c. Suppose you consider buying a share of stock at $51. The stock is expected to pay $2 dividends next year and you expect it to sell then for $53. The stock risk has been evaluated at =0.5. Is the stock overpriced or underpricedStep by Step Solution
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