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$1.50 intro to finance question

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  • Due on Dec. 08, 2011
  • Asked on Dec. 08, 2011 at 07:30:18AM
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jimmarra1
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Q:

The risk-free rate is 3.5 percent and the expected return on the market is 11 percent. Stock A has a beta of 1.1 and an expected return of 12 percent. Stock B has a beta of .92 and an expected return of 10.25 percent. Are these stocks correctly priced? Why or why not? 

 

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  • Posted on Dec. 08, 2011 at 07:35:33AM
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OnlineProf25
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A:
Preview: ... +.92*7.5 = 10.4   Stock A is overpriced as its return of 12% is more than the expected return bas ...
The full tutorial is about 81 words long .
 
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  • Posted on Dec. 08, 2011 at 08:06:33AM
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Preview: ... s overpriced as its return of 12% is more than t ...
The full tutorial is about 41 words long .
 
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  • Posted on Dec. 08, 2011 at 08:30:07AM
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Preview: ... priced as its return of 11% is more than the expec ...
The full tutorial is about 41 words long .