Question
Stock A has a beta of 1.2 and Stock Bs beta is 0.8. Stock As expected return is 11.1% and Stock Bsexpected return is 7.85%.
Stock A has a beta of 1.2 and Stock Bs beta is 0.8. Stock As expected return is 11.1% and Stock Bsexpected return is 7.85%. Risk free rate is 2% and market premium is 7.2%. Are the stocks correctly priced? Which one is expensive relative to the other one?
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Contemporary Business Mathematics with Canadian Applications
Authors: S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs
10th edition
133052311, 978-0133052312
