In an efficient market, one cannot make money. security prices are seldom far above or below their justified levels. security prices react quickly to new information. s. curity prices react quickly to new information, security prices are seldom far above or below their justified levels, and security analysis will not enable investors to realize superior returns consistently. security analysis will not enable investors to realize superior returns consistently. The is defined as the present value of all cash proceeds to the investor in the stock. intrinsic value market capitalization rate dividend payout ratio plowback ratio The risk-free rate and the expected market rate of return are 0.06 and 0.12 , respectively. According to the capital asset pricing model (CAPM), the expected rate of return on security X with a beta of 1.4 is equal to 2.132. 0.144 . 0.18 . 0.06 0.12