Question: Your personal opinion is that a security has an expected rate of return of 12%. An asset pricing model (the Capital Asset Pricing Model, CAPM)

  1. Your personal opinion is that a security has an expected rate of return of 12%. An asset pricing model (the Capital Asset Pricing Model, CAPM) predicts that the fair return of this asset (given its risk) is 11.0%. According to the CAPM , this security is

    A

    underpriced.
    B

    overpriced.
    C

    fairly priced.
    D

    cannot be determined from data provided.

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