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  3. answer c) with explanation suppose the rate o

answer c) with explanation Suppose the rate of return on...

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Finance

answer c) with explanation
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Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 8%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 13%. According to the capital asset pricing model: Required: a. What is the expected rate of return on the market portfollo? Note: Round your answer to 2 decimal places. b. What would be the expected rate of return on a stock with =0 ? Note: Round your answer to 2 decimal places. c. Suppose you consider buying a share of stock at $48. The stock / s expected to pay $2.5 dividends next year and you expect it to sell then for $50. The stock risk has been evaluated at =0.5. Is the stock overpriced or underpriced

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