Question
Stock X has an expected return of 9.9% and a beta of 0.7. Stock Y has an expected return of 14.3% and a beta of
Stock X has an expected return of 9.9% and a beta of 0.7.
Stock Y has an expected return of 14.3% and a beta of 1.2.
Stock Z has an expected return of 16.8% and a beta of 1.8.
The market risk premium is 7% and the risk-free rate is 5%.
Which of these stocks is overpriced?
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, William J. Kretlow
11th Edition
0324653506, 978-0324653502
