9. A stock with a beta of 1.5 currently priced at $50 is expected to increase in price to $56 by year- end and pay a $1 dividend. The expected market retum is 15%, and the risk-free rate is 8%. The stock is: A. overpriced, so do not buy it. B. underpriced, so buy it. C. properly priced, so buy it. 10. The risk-free rate is 6%, and the expected market return is 15%. A stock with a beta of 1.2 is selling for $25 and will pay a $1 dividend at the end of the year. If the stock is priced at $26 at year-end, it is: A. overpriced, so short it. B. underpriced, so buy it. C. underpriced, so short it.

9. A stock with a beta of 1.5 currently priced at $50 is expected to increase in price to $56 by year- end and pay a $1 dividend. The expected market retum is 15%, and the risk-free rate is 8%. The stock is: A. overpriced, so do not buy it. B. underpriced, so buy it. C. properly priced, so buy it. 10. The risk-free rate is 6%, and the expected market return is 15%. A stock with a beta of 1.2 is selling for $25 and will pay a $1 dividend at the end of the year. If the stock is priced at $26 at year-end, it is: A. overpriced, so short it. B. underpriced, so buy it. C. underpriced, so short it.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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