Multiple Choice
Design Interior's stock has an expected return of 11.00 percent and a beta of 1.4.The market return is 10.75 percent and the risk-free rate is 4.0 percent.This stock is ________ because the CAPM return for the stock is ________ percent.
A) greatly overvalued; 13.45
B) slightly overvalued; 12.91
C) priced correctly; 13.25
D) slightly undervalued; 12.91
E) greatly undervalued; 13.45
Correct Answer:
Verified
Correct Answer:
Verified
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