Business, 16.12.2019 20:31 Clerry

Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. suppose also that theexpected return required by the market for aportfolio with a beta of 1.0 is 12%. according to the capital asset pricingmodel: a. what is the expected return on the market portfolio? b what would be the expected return on a zero-beta stock? c. suppose you consider buying a share of stock at a price of $40. the stock is expected to pay a dividend of 53 next yearand to sell then for 541. the stock risk has been evaluated at b = —.5. is the stock overpriced or underpriced?

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Suppose the yield on short-term government securities (perceived to be risk-free) is about 4%. suppo...

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