Your Opinion Is That CSCO Has an Expected Rate of Return

question 50

Multiple Choice

Your opinion is that CSCO has an expected rate of return of 0.1375. It has a beta of 1.3. The risk-free rate is 0.04 and the market expected rate of return is 0.115. According to the Capital Asset Pricing Model, this security
Is

• A) underpriced.
• B) overpriced.
• C) fairly priced.
• D) Cannot be determined from data provided.

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Definitions:

Mislaid

Property that is intentionally placed somewhere and then forgotten by the owner.

Abandoned

Something or someone that is abandoned has been left behind or given up on, often leading to a state of neglect or disuse.

Lost

Unable to find one's way; not knowing one's whereabouts.

Common Carriers

Entities that offer transportation services to the public under the regulation of governmental authority.