Your opinion is that Boeing has an expected rate of return of 0.08.It has a beta of 0.92.The risk-free rate is 0.04 and the market expected rate of return is 0.10.According to the Capital Asset Pricing Model,this security is
A)underpriced.
B)overpriced.
C)fairly priced.
D)cannot be determined from data provided.
E)none of the above.

Question

Quizplus · Accepted Answer

According to the Capital Asset Pricing Model (CAPM), the expected rate of return of a security is equal to the risk-free rate plus the security's beta multiplied by the difference between the expected market rate of return and the risk-free rate.

Using the formula, we can calculate Boeing's expected rate of return as: 
0.04 + 0.92 * (0.10 - 0.04) = 0.08

This matches the given expected rate of return of 0.08, indicating that the security is fairly priced.

Your Opinion Is That Boeing Has an Expected Rate of Return