Question: Question 1 3 pts Security X has an expected rate of return of 10% and a beta of 1.22. The risk-free rate is 5% and
Question 1 3 pts Security X has an expected rate of return of 10% and a beta of 1.22. The risk-free rate is 5% and the market expected rate of return is 15%. According to the capital asset pricing model, is the security overpriced or underpriced and is the alpha positive or negative? underpriced; negative overpriced; positive underpriced; positive overpriced; negative Question 2 3 pts Suppose the market risk premium is expected to be 8%, a stock has a beta of 1.12, and the T-bill rate is 3%. An analyst believes the stock will provide a return of 15%. Using the CAPM, what would be the stock's alpha? Enter your answer as a decimal with three digits (e.g., 0.123, not 12.3%)
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