Question: Problem 12-11 CAPM and Expected Return (LO2) The risk-free rate is 7% and the expected rate of return on the market portfolio is 14%. a.

Problem 12-11 CAPM and Expected Return (LO2) The risk-free rate is 7% and the expected rate of return on the market portfolio is 14%. a. Calculate the required rate of return on a security with a beta of 1.25 . Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. b. If the security is expected to return 17%, is it overpriced or underpriced

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