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XYZ Inc. stock price rises from $57 to $61 per share over the next year. The annual return on the benchmark index (S&P 500) has
XYZ Inc. stock price rises from $57 to $61 per share over the next year. The annual return on the benchmark index (S&P 500) has been 9.25% and the short-term T-bill rate has been yielding 3.75% per year over the past 9 years. If XYZ Inc. beta is 0.85, will you purchase the stock?
Yes, because the expected return equals the estimated return. | ||
No, because it is undervalued. | ||
No, because it is overvalued. | ||
Yes, because it is undervalued. | ||
Yes, because it is overvalued. |
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