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You are told that the market expected return is equal to 12%; the risk-free rate is equal to 2%; and the beta of security XPNS
You are told that the market expected return is equal to 12%; the risk-free rate is equal to 2%; and the beta of security XPNS is equal to 1.5. You look at Bloomberg and see that XPNS is trading at an expected return of 19.0%. Please mark the only INCORRECT statement: Oa. According to CAPM, XPNS'alpha is equal to 2% b. According to CAPM you should go long XPNS because the stock is cheap O c. According to CAPM you should go short XPNS because the stock is expensive CAPM predicts that XPNSexpected return is equal to 19.0% O d
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