Your opinion is that Boeing has an expected rate of return of 0.112. 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.

Question

Quizplus · Accepted Answer

11.2% - [4% + 0.92(10% - 4%)] = 1.68%; therefore, the security is underpriced.

Your Opinion Is That Boeing Has an Expected Rate of Return