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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Transcribed Image Text:An investor estimates that stock AAPL has an expected rate of return of 12.8%, and a beta of 0.8. If the risk-free rate is 4% and the market risk premium is 6%, according to the
Capital Asset Pricing Model, this security is
Ans:
a) fairly priced.
b) overpriced.
c) underpriced.
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