A stock has a beta of 1.8. A security analyst who specializes in studying this stock expects its return to be 18%. Suppose the risk free rate is 5% and the market risk premium is 18%. Is the analyst pessimistic or optimistic about this stock relative to the market expectations?

Answer rating: 100% (QA)

The analyst is optimistic about this stock because the expected return of 18 exceeds its bet... View the full answer