Question

The expected return and betas for three stocks are given below: Stock EXPECTED RETURN (%) BETA...

The expected return and betas for three stocks are given below:

Stock EXPECTED RETURN (%) BETA
A 11 1.4
B 9 1.2
C 10 1.7


  
Market returns, R m, is 8% and risk-free rate is 3%. Which of the three stocks is undervalued according to the CAPM?

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Answer #1

Answer:- Stock A is undervalued according to CAPM.

Explanation:-

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