Assume the Following Data for a Stock: Beta = 0

question 64

Multiple Choice

Assume the following data for a stock: Beta = 0.9; Risk-free rate = 4%; Market rate of return = 14%; and Expected rate of return on the stock = 13%.Then the stock is:

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

---

Definitions:

International Bonds

Bonds issued in a country by a foreign entity, in the currency of the country where it is issued, as a way for the issuer to gain access to a foreign capital market.

Eurocurrency

Currency deposited by national governments or corporations in banks outside their home market, typically in a currency not native to the deposit location.

Financial Centre

A global city known for hosting a cluster of national or international financial institutions, markets, and service providers.

Money

A medium of exchange that enables the transfer of goods and services among parties.