Use this info to answer the next five questions

	Return on Stock A (%)	Return on Market (%)
2011	-10	-5.0
2012	5.5	8.5
2013	9.1	5.9
2014	-2.5	-4.3
Beta	?	?
Expected Return	?	?

Question 2 (1 point)

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What are the betas of stock A and market?

Question 2 options:

	Beta of Stock A = 0.76, Beta of Market = 0
	Beta of Stock A = 0.95, Beta of Market = 0
	Beta of Stock A = 1.10, Beta of Market = 1
	Beta of Stock A = 1.15, Beta of Market = 1

Question 3 (1 point)

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What are the expected returns of stock A and market?

Question 3 options:

	Expected Return on Stock A = 0.53%, Expected Return on Market = 1.28%
	Expected Return on Stock A = 1.53%, Expected Return on Market = 1.15%
	Expected Return on Stock A = 2.52%, Expected Return on Market = 1.38%
	Expected Return on Stock A = 3.53%, Expected Return on Market = 2.28%

Question 4 (1 point)

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Based on CAPM, what is the true return of stock A if the T-bill rate is 0.50% using the average return on market found from previous question?

Question 4 options:

	2.541%
	3.257%
	1.358%
	1.657%

Question 5 (1 point)

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Which of the following is correct regarding the value of Stock A based on CAPM return and expected returns found from previous questions?

Question 5 options:

	Stock A is undervalued since it is plotted above SML.
	Stock A is overvalued since it is plotted below the SML.
	Stock A is overvalued since it is plotted above the SML.
	Stock A is undervalued since it is plotted below SML.