Security X Has an Expected Rate of Return of 13

question 8

Multiple Choice

Security X has an expected rate of return of 13% and a beta of 1.15.The risk-free rate is 5% and the market expected rate of return is 15%.According to the capital asset pricing model,security X is _________.

• A) fairly priced
• B) overpriced
• C) underpriced
• D) None of the above

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Definitions:

Nervous System

The complex network of nerves and cells that carry messages to and from the brain and spinal cord to various parts of the body.

Cortisone

A steroid hormone used as a medication to treat inflammation and immune system diseases.

Parathyroid Gland

Small endocrine glands in the neck that produce parathyroid hormone, which regulates calcium levels in the blood.

Serum Calcium Levels

The concentration of calcium in the blood, important for bone health, muscle function, and nerve signaling.