Question
The risk-free rate is 5% and the expected rate of return on the market portfolio is 10%. a. Calculate the required rate of return on
The risk-free rate is 5% and the expected rate of return on the market portfolio is 10%.
a.Calculate the required rate of return on a security with a beta of 1.98.(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b.If the security is expected to return 14%, is it overpriced or underpriced?
- Overpriced
- Underpriced
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
13th edition
132743469, 978-0132743464
