A firm's class A common shares are currently trading for $14.38 on the Toronto Stock Exchange....

 

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A firm's class A common shares are currently trading for $14.38 on the Toronto Stock Exchange. The risk free rate prevailing in the market is currently 4%o, the expected return on the market portfolio is 10%. The firm has a beta of 1.2 and is expected to pay a dividend of $2 forever. Under these conditions, the firm's common shares are currently: O a. Fairly priced O b. Under priced because the CAPM return is lower than its implied return Oc. Over priced because the CAPM return is lower than its implied return O d. Under priced because the CAPM return is higher than its implied return Oe. Over priced because the CAPM return is higher than its implied return A firm's class A common shares are currently trading for $14.38 on the Toronto Stock Exchange. The risk free rate prevailing in the market is currently 4%o, the expected return on the market portfolio is 10%. The firm has a beta of 1.2 and is expected to pay a dividend of $2 forever. Under these conditions, the firm's common shares are currently: O a. Fairly priced O b. Under priced because the CAPM return is lower than its implied return Oc. Over priced because the CAPM return is lower than its implied return O d. Under priced because the CAPM return is higher than its implied return Oe. Over priced because the CAPM return is higher than its implied return

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