The risk-free rate is 1%. The expected market rate of return is 10%. If you expect stock ABC with a beta of 0.6 to offer
Posted: Thu May 19, 2022 12:20 am
The risk-free rate is 1%. The expected market rate of return is
10%. If you expect stock ABC with a beta of 0.6 to offer a rate of
return of 9%, you should
A) buy stock ABC because it is overpriced.
B) buy stock ABC because it is underpriced.
C) sell short stock ABC because it is overpriced.
D) sell short stock ABC because it is underpriced.
E) None of the options, as the stock is fairly priced.
10%. If you expect stock ABC with a beta of 0.6 to offer a rate of
return of 9%, you should
A) buy stock ABC because it is overpriced.
B) buy stock ABC because it is underpriced.
C) sell short stock ABC because it is overpriced.
D) sell short stock ABC because it is underpriced.
E) None of the options, as the stock is fairly priced.