Work out this exercise on risk and return, Suppose you observe the following situation as depicted in the table below. If the risk-free rate is 8%, are these securities correctly priced? What would the risk-free rate have to be is they are correctly priced?

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SECURITY Cooley, Inc. Moyer Co. BETA EXPECTED RETURN 1.6 1.2 19% 16% SECURITY Cooley, Inc. Moyer Co. BETA EXPECTED RETURN 1.6 1.2 19% 16%

Answer rating: 100% (QA)

1 NO these securities are not correctly priced If the risk free rate is 8 Market Risk premi... View the full answer