Question: Can you please further explain the correct answer (Answer C) 30) The expected return on the market portfolio is 19%. The risk-free rate is 12%.

Can you please further explain the correct answer (Answer C)

30) The expected return on the market portfolio is 19%. The risk-free rate is 12%. The expected return on SDA Corporation common stock is 18%. The beta of SDA Corporation common stock is 1.40 . Within the context of the capital asset pricing model, A) SDA Corporation stock is underpriced B) SDA Corporation stock is fairly priced C) SDA Corporation stock's alpha is 3.80% D) SDA Corporation stock's alpha is 3.8%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Please help me i will give good rating Nano stock is a common stock and currently is selling at RM23/share. Its growth rate is 7%, the beta is 1.2, risk-free rate is 3% and the expected return on...

I attached an excel file with the questions, Any help on these would be greatly appreciated. 1. A stock has an expected return of 16.5 percent, the risk-free rate is 4.2 percent, and the market risk...

Please answer the green the boxes highlighted and tell me the equation you used to get the answer. AQ14 fx AD AE AF AG AH AI AU AK AL AM AN AO AP AR 1 2 According to the MRK Data Summary provided:...

Multiple Choices (15x3- 45 points) 1. In the event of the firm's bankruptcy (B) Be most shareholders can lose is their original investment in the firm's stock rs have claim to what is left from the...

please answers these correctly, thanks QUESTION 1 What is the expected return of your portfolio if you own 570 shares of Shark, which are priced at $19.00 each and have a beta of 1.44, and 591 shares...

need to know how to do this by hand not excel stock be? 14. Using CAPM. A stock has an expected return of 15 percent, the risk-free rate is 4 percent, and the market risk premium is 8 percent. What...

Please answer the question on the picture Formula provided The expected return of market portfolio is '| 0%. The standard deviation of market portfolio is 20%. Risk free interest rate is 2%. There is...

Problem 1. Capital Market Line (CML) Please fill in the cells highlighted in GREEN. Given the market portfolio and risk-free rate below, answer the following question: Market portfolio Expected...

Table 12.2 Expected rates of return demanded by investors for selected companies. Expected return is calculated assuming a risk-free rate of 3% and a market risk premium of 7%. Company Beta Expected...

5. Company cost of capital You are given the following information for Golllen Fleece Financial: Calculate Golden Fleece's company cost of cupital. Ignote taxes. 6. Company cost of capital Nero...

What is a stock split and how does it affect stockholders equity?

Although HÃ¼ckel's rule (Section 14.7) strictly applies only to monocyclic compounds, it does appear to have application to certain bicyclic compounds, if one assumes use of resonance...

A firm has a profit margin of 7 percent and a dividend payout ratio of 3 0 percent. The total asset turnover is . 9 0 , and the debt - equity ratio is . 4 5 . What is the sustainable rate of growth?...

1) Write a program to count the lines in a file. An example file:1.txt is attached. The program will take one argument - the name of the file to be opened and read. 2) Average the numbers found in...