The Common Stock of PDS Has a Beta of

question 39

Multiple Choice

The common stock of PDS has a beta of .98 and an expected return of 12.34%. The risk-free rate of return is 4.1% and the market rate of return is 11.65%. Which one of the following statements is true
Given this information?

• A) The return on PDS stock will graph below the Security Market Line.
• B) PDS stock is underpriced.
• C) The expected return on PDS stock based on the Capital Asset Pricing Model is 15.52%.
• D) PDS stock has more systematic risk than the overall market.
• E) PDS stock is correctly priced.

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Behaviors that involve deliberately destroying or damaging public or private property.

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