The expected returns and betas of two stocks aamp b are, Ask an Expert

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The expected returns and betas of two stocks A& B are shown in the table below. The expected market return as represented by the S&P 500 is 10% and the risk free rate is 5%.

Stock A 11% Expected Return 1.2 beta

Stock B 14% Expected return 1.5 beta

True or Flase for each

The fair value return of stock A is 13%

Stock B can be bought at a bargain

Stock A is over-priced

Stock A is better because it’s less risky

The fair-value return of stock b is 12.5%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92781572

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