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Stock FM has a historical return of 1425%, a standard deviation of 14.1% and a correlation of 0.51 with the market. The standard deviation of
Stock FM has a historical return of 1425%, a standard deviation of 14.1% and a correlation of 0.51 with the market. The standard deviation of market retums is 19.1%, and the expected return is 15.13%. The risk-free rate is 5.63%. Which of the following statements is correct assuming CAPM holds? (Please retain at least 4 decimal places in your calculations and at least 2 decimal places in the final answer.) O a Sbok FM is overpriced with a required rate of retum ol 921%. Od Stock FM is underpriced with a required rate of retum of 921% Oc Slook FM is overpriced with a required rate o rebum of 10.48% 0d Stock FM is underpriced with a required rate of retum of 10.48%. Oe Insufort information Previous page 5 6 7
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