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X has an expected return of 1 6 % and a beta of 1 . 0 . Y has an expected of 1 2 %
X has an expected return of and a beta of Y has an expected of and a beta of
The risk free rate is According to CAPM, which of the follow statements are true?
I. Both X and Y are fairly priced.
II If X is correctly priced, Y is underpriced.
III. If Y is correctly priced, X is overpriced.
IV Both X and Y are overpriced.
A I only
B II only
C II and III only
D IV only
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