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The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent The table below has information on 5
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent The table below has information on 5 stocks. Can you figure out which one of them is correctly priced (i.e., correctly compensates investors for the amount of systematic risk they are facing)? Stock Beta Expected Return #1 #2 #3 #4 #5 0.64 0.97 1.22 1.37 1.68 9.47% 12.03 14.44 15.80 18.37
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