An Asset Is Priced to Earned an 18% Annual Return;

question 51

Multiple Choice

An asset is priced to earned an 18% annual return; the asset has a beta of 1.1.premium is 8% and the risk free rate is 6%. The asset is

• A) correctly priced.
• B) underpriced.
• C) overpriced.
• D) cannot be determined with the information provided

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Definitions:

Coccyx

The small bone at the base of the spine, commonly referred to as the tailbone, which consists of three to five fused vertebrae.

Nares

The nostrils or the external openings of the nasal cavity through which air enters and exits the nose.

Genitalia

The external and internal organs of the reproductive system in both males and females.

Granulation

The formation of new, fibrous tissue during the healing process of a wound.