Question
You believe that Omega stock which has a beta of 1.2 will return this coming year. The market is expected to return and T-bills return
"You believe that Omega stock which has a beta of 1.2 will return this coming year. The market is expected to return and T-bills return . According to CAPM, which one of these statements is correct given this information? "
A. The stock is currently under priced
B. The stock plots below the security market line.
C. The risk premium on the stock is too low given the stock's beta.
D. The stock fits on the security market line.
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Financial Management Theory and Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
2nd Canadian edition
176517308, 978-0176517304
