The expected return on the market portfolio is 15%.The risk-free rate is 8%.The expected return on SDA Corp.common stock is 16%.The beta of SDA Corp.common stock is 1.25.Within the context of the capital asset pricing model,_________.
A) SDA Corp. stock is underpriced
B) SDA Corp. stock is fairly priced
C) SDA Corp. stock's alpha is -0.75%
D) SDA Corp. stock alpha is 0.75%

Question

Quizplus · Accepted Answer

The Answer of The expected return on the market portfolio is 15%.The risk-free rate is 8%.The expected return on SDA Corp.common stock is 16%.The beta of SDA Corp.common stock is 1.25.Within the context of the capital asset pricing model,_________.
A) SDA Corp. stock is underpriced
B) SDA Corp. stock is fairly priced
C) SDA Corp. stock's alpha is -0.75%
D) SDA Corp. stock alpha is 0.75%

The Expected Return on the Market Portfolio Is 15