Based on Your Analysis, You Believe That Alpha Stock Which

question 84

Multiple Choice

Based on your analysis, you believe that Alpha stock which has a beta of 1.32 is going to yield 14.05% this coming year. The market is expected to yield 11.4% and T-bills are yielding 3.8%. According to CAPM, which one of these statements is correct given this information?

• A) The stock is currently underpriced.
• B) The stock plots below the security market line.
• C) The risk premium on the stock is too low given the stock's beta.
• D)The stock plots to the left of the market on a security market line graph.

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Definitions:

Personal Contact

Direct interaction between two or more people, typically used in marketing to build relationships with customers or clients.

Online Retailers

Businesses that sell products or services over the Internet to consumers, without having physical storefronts.

Dynamic Billboards

Outdoor advertising structures that leverage digital technology to display changing images or messages to capture viewer attention.

Final Selling Price

The last price at which a product or service is sold to a customer, including all discounts, promotions, and negotiations.