Assume the Following Data for a Stock: Beta = 0

question 66

Multiple Choice

Assume the following data for a stock: Beta = 0.5; Risk-free rate = 4%; Market rate of return = 12%; and Expected rate of return on the stock = 10%.Then the stock is:

• A)overpriced.
• B)underpriced.
• C)correctly priced.
• D)cannot be determined.

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Definitions:

Obsessive-compulsive

Pertaining to a disorder characterized by recurrent, unwanted thoughts (obsessions) and repetitive behaviors (compulsions).

Histrionic Personality

A personality disorder characterized by a pattern of excessive emotionality and attention-seeking behavior.

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a manual published by the American Psychiatric Association that classifies and provides diagnostic criteria for mental disorders.

Schizophrenia

A chronic psychological disorder characterized by a disconnect among cognition, emotion, and behavior, resulting in distorted perceptions, improper feelings and actions, detachment from reality and interpersonal connections towards fantasy and illusion, accompanied by a feeling of psychic disintegration.