QUESTION 51 A stock has n HPR of 10%. The stock's beta is 1.48. The risk-free...

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Answer 1

Answer #1

Using CAPM model,

Required Rate = 0.02 + 1.48(0.0623)

Required Rate = 11.22%

Expected Rate = 10%

As required rate > expected rate, stock is overvalued so one should shortsell

Answer 2

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