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Which one of the following stocks is correctly priced if the risk-free rate of return is 4.1 percent and the market risk premium is 8.6

Which one of the following stocks is correctly priced if the risk-free rate of return is 4.1 percent and the market risk premium is 8.6 percent?

Stock Beta Expected Return
A .81 7.88 %
B 1.57 12.69
C 1.38 11.35
D 1.37 11.99
E .95 12.27

Multiple Choice

  • Stock A

  • Stock B

  • Stock E

  • Stock C

  • Stock D

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