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Author Question: Stock A has an expected return of 11%, a beta of 1.5, and a standard deviation of 22%. Stock B also ... (Read 77 times)

amymoore

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on: Aug 7, 2023
Stock A has an expected return of 11%, a beta of 1.5, and a standard deviation of 22%. Stock B also has a beta of 1.5, an expected return of 17%, and a standard deviation of 13%. Portfolio AB has $300,000 invested in Stock A and $200,000 invested in Stock B. The correlation between the two stocks’ returns is zero (that is, rA,B= 0). Which of the following statements is correct?

◦

Portfolio AB’s beta is less than 1.5.


◦

Portfolio AB’s expected return is 14%.


◦

The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is overvalued.


◦

The stocks are not in equilibrium based on the CAPM; if A is valued correctly, then B is undervalued.

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Marked as best answer by amymoore on Aug 7, 2023

Snabbey

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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amymoore

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it

dantucker

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Reply 3 on: Yesterday
Wow, this really help

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