Your Opinion Is That Security a Has an Expected Rate

question 20

Multiple Choice

Your opinion is that security A has an expected rate of return of 0.145.It has a beta of 1.5.The risk-free rate is 0.04 and the market expected rate of return is 0.11.According to the Capital Asset Pricing Model,this security is

• A)underpriced.
• B)overpriced.
• C)fairly priced.
• D)cannot be determined from data provided.
• E)none of the above.

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Definitions:

Complexity

Characteristic of a system or process that has multiple components interacting in varied and intricate ways, leading to unpredictable outcomes and behaviors.

Civil Lawsuit

A legal dispute between two or more parties seeking relief or compensation, initiated by the filing of a complaint in a civil court.

Plaintiff

The party who initiates a lawsuit in a civil case, seeking legal remedy for an alleged wrong.

Constitution

The supreme law of a country, outlining the framework for its governance and the fundamental principles and rights that protect its citizens.