Wilson Farms' Stock Has a Beta of

question 86

Multiple Choice

Wilson Farms' stock has a beta of .73 and an expected return of 9.0%. The risk-free rate is 1.9% and the market risk premium is 7.3%. This stock is ________ because the CAPM return for the stock is ________%.

• A)undervalued; 7.23
• B)undervalued; 7.53
• C)undervalued; 7.46
• D)overvalued; 7.23
• E)overvalued; 7.53

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Definitions:

Dissent Procedure

A legal process that allows a corporation's minority shareholders to object to certain corporate actions they disagree with.

Corporate Structure

The organization of different departments or units within a company, defining roles, responsibilities, and authority levels.

Market Value

The estimated amount for which an asset or service would trade in the marketplace at a given time.

Promoter

A person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering.