Question: Correct answer and calculations are all there. Need an explanation on why the answer is Overpriced. Thank you! 2. Your opinion is that CSCO has

Correct answer and calculations are all there. Need an explanation on why the answer is "Overpriced". Thank you!

2. Your opinion is that CSCO has an expected rate of return of 0.13 . It has a beta of 1.3 . The risk-free rate is 0.04 and the market expected rate of return is 0.115 . According to the Capital Asset Pricing Model, this security is A. underpriced. B. overpriced. C. fairly priced. D. Cannot be determined from data provided. K=rf+beta(rmrf) AR=13%[4%+1.3(11.5%4%)]=0.75%; therefore, the security is overpriced

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