You have been asked to analyze two stocks, Stock A and Stock B. The beta of stock A is 1.2, and the beta of stock B is 0.8. The expected return on stock A is 13.5%, the expected return on stock B is 11.0% and the risk-free rate is 7%
We also know that stock A is fairly priced. Which of the following regarding Stock B must be true?
A) The expected return on stock A is too high.
B) Stock B is also fairly priced.
C) The price of stock B is too high.
D) The expected return on stock B is too high.
C
You might also like to view...
Which of the following is not an example of manufacturing overhead costs?
A) Fringe benefits paid to assembly-line workers B) Depreciation of factory machinery C) Overtime pay to factory supervisors D) Insurance on factory machinery
Which of the following is NOT part of the three-step process to determine an appropriate order for a business document?
a. Identify the central idea of the message. b. Determine the likely receiver reaction to the message. c. Decide if the central idea should be listed first or near the end. d. Start with the most difficult points first.
A stock has a beta coefficient, ?, equal to 1.20. The risk premium associated with the market is 9 percent, and the risk-free rate is 5 percent. Application of the capital asset pricing model indicates that the stock's appropriate return should be _____.
A. 9.8% B. 5.2% C. 12.5% D. 15.8% E. 17.2%
Generally, disciplinary interviews are held over issues of workplace conduct or:
A. organizational policy. B. job performance. C. career path possibilities. D. collective-bargaining disagreements.