Question
The risk-free rate of return is currently 4.1 percent and the market portfolio return is estimated to be 12.4 percent. The expected returns and betas
The risk-free rate of return is currently 4.1 percent and the market portfolio return is estimated to be 12.4 percent. The expected returns and betas of four shares are as follows:
| Share | Beta | Expected Return (%) |
|---|---|---|
| A | 1.20 | 13.76 |
| B | 1.50 | 16.55 |
| C | 1.39 | 15.64 |
| D | 0.91 | 11.65 |
According to CAPM which stocks are overvalued?
| a) | C and D | |
| b) | Only D | |
| c) | Only A | |
| d) | D and B | |
| e) | Only B |
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Take Charge Of Your Money Now Essential Strategies For Winning In Any Financial Climate
Authors: A.J. Monte, Rick Swope
1st Edition
0345517334, 978-0345517333
