Your opinion is that CSCO has an expected rate of return of 0.13. It has a beta of 1.3. The risk-free rate is 0.04 and the market expected rate of return is 0.115. According to the Capital Asset Pricing Model, this security is
A. underpriced.
B. overpriced.
C. fairly priced.
D. Cannot be determined from data provided.
B. overpriced.
13% – [4% + 1.3(11.5% – 4%)] = –0.75%; therefore, the security is overpriced.
You might also like to view...
Aron is concerned about union organizing activities among his employees. He knows that many of the employees like and respect Derrick. Aron thinks if he can get Derrick to vote against the union, others will do so as well. Aron offers Derrick a 10% raise if Derrick does not vote for the union. Aron knows this will be a lot of money, but thinks he will save money in the long term by avoiding the union. It appears that Aron violated which of the NLRB’s NO TIPS rules regarding what management cannot do during labor elections.
A. no threats B. no interrogations C. no promises D. no spying
Why are the inventory and cost of goods sold accounts attractive targets for managerial fraud?
A. There are no adequate methods of record keeping for inventory. B. Cost of goods sold and Inventory accounts are not attractive targets of fraud. C. These accounts are more significant than most other accounts. D. There are few if any procedures that can check for fraud in these accounts.
Art and Alma made capital contributions of 60% and 40% respectively to their newly formed partnership, AA & Associates. They did not have a written partnership agreement. At the end of the first year, the partnership made a profit of which Alma now claims half. However, Art maintains he should receive 60%. Who is correct?
A. Art, since the UPA presumes that profits and losses are divided in proportion to capital contribution. B. Art, since it would only be fair. C. Alma, because she works in the business. D. Alma, as the UPA provides that profits are split equally unless the partners agree otherwise.
In general, contracts in Japan (compared to business contracts in the U.S.) tend to be:
a. more formal and of shorter duration b. more formal but of longer duration c. less formal and of shorter duration d. less formal and of longer duration e. just about the same