2. 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 of
Posted: Thu May 19, 2022 12:21 am
2. 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.
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.