Question 4

(Chapters 11/13) Stock A has a beta of 0.80 and an IRR of 10.10 percent.

Stock B has a 1.35 beta and an IRR of 14.32 percent. Stock C has a 1.60 beta and an IRR of 16.12 percent. Which one of these stocks is correctly priced if the risk-free rate of return is 4.6 percent and the market rate of return is 11.8 percent? (round answer to 2 digit, for example 10.92 percent)

Stock A

Stock B

Stock C

O Stocks A and B

O Stocks B and C