Question
The expected return on the market portfolio is 20%. Therisk-free rate is 12%. The expected return on SDA Corp. commonstock is 19%. The beta of
The expected return on the market portfolio is 20%. Therisk-free rate is 12%. The expected return on SDA Corp. commonstock is 19%. The beta of SDA Corp. common stock is 1.20. Withinthe context of the capital asset pricing model, _________.
SDA Stock is underpriced
SDA stock is fairly priced
SDA stock's alpha is 2.6%
SDA Corp. stock's alpha is –2.60%
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Financial Theory and Corporate Policy
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
4th edition
321127218, 978-0321179548, 321179544, 978-0321127211
