OLG Stock Has a Beta of 0

question 62

Multiple Choice

OLG stock has a beta of 0.98 and an expected return of 10.52 percent.The risk-free rate of return is 3.02 percent,and the market rate of return is 10.47 percent.Which one of the following statements is true given this information?

• A)OLG stock is correctly priced.
• B)The return on OLG stock will graph above the security market line.
• C)The expected return on OLG stock based on the capital asset pricing model is 10.13 percent.
• D)OLG stock has more systematic risk than the overall market.
• E)OLG stock is overpriced.

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