All formulas must be written Exercise 1. Consider a stock XYZ, the current price is Po=...
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All formulas must be written Exercise 1. Consider a stock XYZ, the current price is Po= 60 and the expected return E(P)=52. If the riskless asset is equal to 6%, beta= 1.3 and the market portfolio return (RPM)=7 a. Calculate the estimated expected return. b. Calculate the required return. c. Is XYZ stock overpriced or underpriced? Explain why? All formulas must be written Exercise 1. Consider a stock XYZ, the current price is Po= 60 and the expected return E(P)=52. If the riskless asset is equal to 6%, beta= 1.3 and the market portfolio return (RPM)=7 a. Calculate the estimated expected return. b. Calculate the required return. c. Is XYZ stock overpriced or underpriced? Explain why?
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