Which one of the following stocks is correctly priced if the risk-free rate of return is...

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Question

Answer 1

Answer #1

Stock	Beta	Correct expected return *[ Risk free rate + ( Market risk premium Beta ) ]**
A	0.77	10.37%
B	1.55	16.92%
C	1.36	15.32%
D	1.33	15.07%
E	0.95	11.88%

Answer : Stock E is correctly priced.

Answer 2

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