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The expected return on the market portfolio is 24%...

Description

Solution


Question

The expected return on the market portfolio is 24%. The risk-free rate is 6%. The expected return on SDA Corp. common stock is 25%. The beta of SDA Corp. common stock is 1.68. Within the context of the capital asset pricing model, __________. a.SDA Corp. stock is underpriced b.SDA Corp. stock alpha is 11.24% c.SDA Corp. stock is fairly priced d.SDA Corp. stock's alpha is -11.24%

 

Paper#11875 | Written in 18-Jul-2015

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