Question
The risk-free rate is 5% and the expected rate of return on the market portfolio is 10%. a. Calculate the required return of a security
The risk-free rate is 5% and the expected rate of return on the market portfolio is 10%.
| a. | Calculate the required return of a security with a beta of 1.98 and an expected rate of return of 14%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Required return | % |
| b. | Is the security overpriced or underpriced? | ||||
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Market Regulations And Finance
Authors: Ratan Khasnabis, Indrani Chakraborty
2014th Edition
8132217942, 978-8132217947
