Question
The market return is 5%. The treasury yield is 1.5%. Firm A has a Beta of 1.6. a) What is the expected return of the
The market return is 5%. The treasury yield is 1.5%. Firm A has a Beta of 1.6.
a) What is the expected return of the stock?
b) Firm B also has beta of 1.6 as well but its expected return is 6% is firm B over or underpriced? How should you correct for this mispricing?
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Intermediate Financial Management
Authors: Eugene BrighamPhillip Daves
1st Edition
0324594712, 9780324594713
