the risk free rate is 5%. the expected Market return is 11%. if you expect stock x with a beta of 2.1 to offer a rate of return of 15% you should. ....
a. buyt stock x because it is over priced
b. sell short stock x because it is overpriced
c. sell short stock x because it is under priced
d. buy stock x because it is underpriced

Answers

Answer 1

The risk free rate is 5%. the expected Market return is 11%. if you expect stock x with a beta of 2.1 to offer a rate of return of 15% you should buy stock x because it is underpriced (option d).

We'll be using the terms risk-free rate, expected market return, stock X, beta, and rate of return in our explanation.

First, let's find the expected return of stock X using the Capital Asset Pricing Model (CAPM):

Expected Return = Risk-free rate + Beta * (Expected Market Return - Risk-free rate)

Using the given values:
Expected Return = 5% + 2.1 * (11% - 5%)
Expected Return = 5% + 2.1 * 6%
Expected Return = 5% + 12.6%
Expected Return = 17.6%

Now, let's compare the expected return of 17.6% with the given rate of return of 15%.

Since the expected return (17.6%) is higher than the given rate of return (15%), stock X is considered underpriced. This means that the stock is expected to provide higher returns compared to its current price. By buying an underpriced stock, you're potentially taking advantage of an opportunity to earn higher returns as the market eventually corrects the price and it moves closer to its true value. The correct answer is d. Buy stock X because it is underpriced.

For more about expected Market return:

https://brainly.com/question/29435849


#SPJ4


Related Questions

Por que se dice que emprender suele ser una decisión muy difícil quien la toma sabe que esta renunciando a la estabilidad que otorga un salario

Answers

Answer:

porque se dice que quiero tomar el siguiente

what is the differences and similarities between rental goods services and non goods services

Answers

Answer and Explanation:

Rented-Goods Services are represented by retailom where consumers can own a good, or use a service for a specified time. As an example of this, we can mention hotel rooms, ski clothes, cars, houses, among others.

Nongoods Services are also represented by retail, but it presents personal services, where consumers can try them, judge them and then decide if they want to own them.

If the food handler has been diagnosed with one of the Big 6 pathogens
they can return to work 24 hours after showing no symptoms.
TRUE
FALSE

Answers

It’s False bro trust me

Answer:

False.

Explanation:

HELP PLEASE!!!
what is the outcome when a person defaults on a home loan?
A. the person goes to jail.
B. the bank will make the person work a second job.
C.the bank will take the person's car.
D.the bank will foreclose on the home.

Answers

Answer:

D.the bank will foreclose on the home.

Explanation:

The bank may even sue and garnish wages and financial accounts. The bank may even serve a conversion of accetts.

Which of these is NOTa concern for consumers in times of inflation? a.They cannot anticipate the cost of goods and services. b.They lose money on their investments and savings. c.They are at a disadvantage when paying back borrowed money. d.They struggle when they are on a fixed income.

Answers

Answer:

c.They are at a disadvantage when paying back borrowed money.

Explanation:

In any economics of a country, inflation may be defined as the fall of the value of the money or currency of a country over a period of time. In inflation, the general price level increase and the value of money decreases.

Due to inflation, with each currency unit, less of goods or services can be bought. In inflation, the consumers are not concern about the disadvantage when they pay back the money that they borrowed because the value of the money decreases. Money decreases its value but the demand of goods and services increases in the economy.

What would Jamie Lee's financial liability have been had she waited more than two days to report the debit/ATM card lost or stolen

Answers

Explanation:

If Jamie notifies the bank within 2 days of the lost card , her liability for unauthorized would be $50.

Jamie Lee's as the account holder is financially responsible for any form of transfers or withdrawals that has or will be made from their accounts and until He report the theft, he will be liable to all withdrawals.

What is a Checking Account:

A checking account is known to be a kind of bank account that is often used by people as a deposit account.

The usual amount deposited by them in this account is known to be used for paying bills and other form of purchases.

Base on the fact above, Jamie Lee's would be liable for his financial liability because she had waited for more than two days to report her debit/ATM card lost or stolen and as such any theft that happen within those two days on her account is her fault.

Learn more about  checking account from

https://brainly.com/question/24751568

what percentage of CTE learners enroll in post secondary education?​

Answers

Answer:

10th-grade public school students in 2002 who were CTE concentrators in high school, 72 percent enrolled in postsecondary education by 2006, or two years after their expected year of high school graduation, and 84 percent enrolled by 2012, or eight years after their expected year of high school graduation.

Answer:

75% – Percentage of high school students concentrating in a CTE discipline who pursue post-secondary education 43% – Percentage of young workers holding a CTE-related license or certificate who earn more than those holding an associate degree

Explanation:

equity shareholders are called what ​

Answers

Answer:

owners

Explanation:

Shareholders' equity represents the amount invested by the owners of a company in the business by either retaining earnings over time or by investing money in it. The shareholders' equity is a form of a company's net assets. Equity shareholders are also known as Equity Stockholders.

The equity shareholders of a company are called its owners.

Janice, a nurse at a hospital, is preparing a presentation for trainee nurses about guidelines for patient care. What is the purpose of her
presentation?


A. to persuade

B. to instruct

C. to entertain

D. to debate

Answers

Answer:

B

Explanation:

To teach and acknowledge the guidelines for trainee nurses to help patients in an effective way

Which of these is NOT a concern for consumers in times of inflation?
a.They cannot anticipate the cost of goods and services.
b.They lose money on their investments and savings.
c.They are at a disadvantage when paying back borrowed money.
d.They struggle when they are on a fixed income.

Answers

Answer: D

Explanation:

The risk-reward relationship says:

Answers

im not understanding this question.. can you reword it?

who wants to make a call??

Answers

Answer:

Zoom you mean?

Explanation:

Answer:

I want to call my mom,lol

Matt works part-time and is paid $6.75 per hour. Determine Matt's gross pay (hours worked x hourly rate of pay) for last week when he worked 20.25 hours. Round your answer to the hundredths place.

Answers

Answer:

Matt's gross pay (hours worked x hourly rate of pay) for last week when he worked 20.25 hours is equal to $136.69

Explanation:

Per hour amount paid to Matt = $6.75

Total number of hours worked by Matt = 20.25

To find Gross pay, multiply hours worked and hourly rate of pay.

Therefore,

Matt's gross pay (hours worked × hourly rate of pay) for last week when he worked 20.25 hours [tex]=20.25(6.75)=\$136.6875[/tex] ≈ $136.69

brief explain difference between moa and aoa ?​

Answers

Answer:

The MOA (Memorandum of Association) describes the powers and objects of the company, the AOA (Article of Association) defines its rules and the AOA (Articles of Association) is subordinate to the memorandum.

By law, an accountant must hold a CPA designation in order to
?

Answers

Answer:

The CPA designation isn't required to work in corporate accounting or for private companies. However, public accountants⁠—which are individuals working for a firm, such as Deloitte or Ernst & Young, that provides accounting and tax-related services to businesses—must hold a CPA designation.

Explanation:

Answer:

Prepare audited or reviewed financial statements.

Hope this helps :)

HELP ME PLEASEE!! ILL GIVE CROWN!!!
which of the following should credit be used for?
A. small things you want
B. large things you need and that you can repay over time.
C. money that you can never afford to repay.
D. purchasing things you want so you dont have to save.

Answers

Answer:

B

Explanation:

Credit should be used for large things that you can't afford at the moment but over time will be able to repay (like bills). You should never purchase things that are too expensive for you to repay (within a year.)

The markets for prostitution in Nevada and New Jersey have two important differences: 1) prostitutes in New Jersey face higher costs because of government efforts to prosecute them and 2) customers in New Jersey face higher risks of contracting diseases from prostitutes because the illegal nature of the business makes reliable information about product quality much more costly to obtain. Given these facts, which state would you expect the price of prostitution services to be higher? Why? Which state would have the higher amount of services consumed (adjusted for population differences)? Why? What are the underlying economic issues of this market?

Answers

Answer:

Given these facts, which state would you expect the price of prostitution services to be higher? Why?

Since the risks associated to prostitution are higher in New Jersey, we could assume that the price for these services will be higher there. The supply curve of prostitution shift to the left, increasing the price and decreasing the quantity.

Which state would have the higher amount of services consumed (adjusted for population differences)? Why? What are the underlying economic issues of this market?

Since the price is higher in New Jersey, the quantity demanded will be lower. Also, the risks associated to consuming the service will shift the demand curve to the left, reducing the quantity.

Gianna put $1,000 in a savings account for 18 months. The interest on the account is 3.5%.

How much will Gianna earn in interest? What amount will she have at the end of the time period?

Answers

Answer:

You will earn $52.96 in interest

You have $1,052.96 in total.

Facts about the chip category obtained from AC Nielsen are?


syndicated data.



survey data.



questionnaire data.



primary data.



experimental data.

Answers

Answer:

Explanation:

Then what is the question

What are three elements of negligence?
Actual Harm
Breach of duty
State of mind
Duty of care
Proximate cause
Motive

Answers

Answer:

actual harm

breach of duty

duty to act

What careers are in the Information Support and Services career pathway of the IT career cluster? (15 points for you)

Question 1 options:

graphic artists, painters, artists


broadcasters, journalists, writers


help desk specialists, PC support specialists

Answers

I think it’s “help desk specialists, PC support specialists”

How do I find the cash flow coverage ratio?

Answers

Explanation:

There are a few different ways to calculate the cash flow coverage ratio formula, depending on which cash flow amounts are to be included. A general measure of the company’s ability to pay its debts uses operating cash flows and can be calculated as follows:

Cash flow coverage ratio = $80,000,000 / $38,000,000 = 2.105Cash flow coverage ratio = ($64,000,000 + $4,000,000 + $8,000,000) / $38,000,000 = 2

List the type of banking service each consumer would be most likely to use. Explain your answer.

a. A person planning to open a fitness center
b. A musical group
c. wealthy senior citizen
d. A buyer of a van
e. A high school recycling club

Answers

Think the answer is c but I’m not sure if it’s correct
Wealthy senior citizen

An oligopoly is a market structure in which a large number of firms dominate the market. T or F

Answers

Answer: F

Explanation:

An oligopoly is a market structure in which a large number of firms dominate the market.

An oligopoly is a market structure in which a large number of firms dominate the market. FALSE.

Drag the tiles to the correct boxes to complete the pairs.
Match the different types of incomes to their sources.

Answers

Answer:

interest = the amount earned on bonds or savings accounts

capital gains = the profit earned from selling a financial asset

dividend = the amount of money paid to share holders of a company

Explanation:

A capital gain is a financial term that is most often captured on tax returns when money is made above the face value or declared value of an asset or property that is sold.

When an individual 'purchases' a bond or places money into a savings account, that money is held in an "interest" baring account or grows over time. Savings account: A percentage is paid for holding those funds in a savings account based on the amount held. The financial institution where the funds are held, pays the owner a fee for use of said money that it is held. Those funds are called "interest" and are collected by the owner of those funds. A bond is typically purchased at a reduced face value amount. If the bond is held for a stated amount of time, the bond value reaches maturity after that time. Those gains are called interest and are typically captured on a 1099i form for tax purposes.

A dividend is a profit paid to a stockholder or investor of a company/business entity. Typically those funds are paid when a threshold of profits are reached by that company/business entity. Typically a dividend is captured on a 1099d form for tax purposes.

Answer:

interest = the amount earned on bonds or savings accounts

capital gains = the profit earned from selling a financial asset

dividend = the amount of money paid to share holders of a company

Explanation:A capital gain is a financial term that is most often captured on tax returns when money is made above the face value or declared value of an asset or property that is sold.

When an individual 'purchases' a bond or places money into a savings account, that money is held in an "interest" baring account or grows over time. Savings account: A percentage is paid for holding those funds in a savings account based on the amount held. The financial institution where the funds are held, pays the owner a fee for use of said money that it is held. Those funds are called "interest" and are collected by the owner of those funds. A bond is typically purchased at a reduced face value amount. If the bond is held for a stated amount of time, the bond value reaches maturity after that time. Those gains are called interest and are typically captured on a 1099i form for tax purposes.

A dividend is a profit paid to a stockholder or investor of a company/business entity. Typically those funds are paid when a threshold of profits are reached by that company/business entity. Typically a dividend is captured on a 1099d form for tax purposes.

In what type of economy do individuals and firms determine what will be produced?
Mixed
Traditional
Market
Command

Answers

Answer:

market

Explanation:

I think it’s warket hope this helps

Which part of the check gives the bank permission to release the money?

Answers

Answer:

And even though all national banks and federally chartered credit unions are subject to the same hold rules, each institution can release your funds sooner at its discretion. By understanding the rules of funds availability, you can ensure you'll have access to your money when you need it.:

what's the answer? please help, it's overdue​

Answers

Answer: Honestly in my opinion that's a no

Explanation: because that's there imagine without them they wouldn't be able to get that image up and making profit therefore the player should get a cut of the profit that is made.

____ reading will increase your focus and concentration, help you understand the reading, and prepare you to study.

Answers

Answer:

Active.

Explanation:

Active reading can be defined as a process which typically involves an individual being focused on his or her study. It is aimed at acquiring knowledge and understanding of a particular subject or topic without distractions.

Hence, active reading will increase your focus and concentration, help you understand the reading, and prepare you to study.

What does the term 'user
experience' refer to regarding a
website?
A. the overall ease of navigation and ability to
purchase on a company's website
B. the general experience a customer has when
using a product of a business
C. the customer experience when dealing with
customer service representatives

Answers

Answer:b

Explanation:

Other Questions
A company is introducing a new product. The equation y = -0. 001(x - 600)^2+90 predicts the expected profit, inthousands of dollars, where x represents the number of thousands of units of the product sold by the company. How many units must be sold to yield a maximum profit? Find and interpret a 95% confidence interval for the mean depth of all subterranean rodent burrows.15.715.618.218.813.315.414.112.411.612.017.216.516.616.312.814.415.913.517.512.118.416.013.714.314.912.411.516.017.58.419.217.815.115.619.214.712.212.113.816.517.913.214.316.211.715.816.59.115.718.514.2 do the following two statements in (i) and (ii) result in the same value in sum? Global learning based on the multidirectional transfer of skills between subsidiaries and the corporate center is a central feature of a firm pursuing a(n) strategy.A. localizationB. global standardizationC. transnationalD. international Assuming a star with a radius of 1106 km has a planet with a radius of 3105 km. The original observed radiance from the star by a telescope is 1 W/m2. What is the observed stars radiance by the telescope with a transit event?(A) 0.91 W/m2 (B) 0.93 W/m2 (C) 0.95 W/m2 (D) 0.97 W/m2 alfred webers least cost theory takes into account all of the following except stock dividends have the following effects on retained earnings: select one: a. decrease b. double c. no change d. increase the 52-kg flywheel has a radius of gyration k = 0.46 m about its shaft axis and is subjected to the torque m = 1.7(1 - e-0.12) where is in radians. if the flywheel is at rest ____ tend to steer the movement of surface pressure systems. The machine has a mass m and is uniformly supported by four springs, each having a stiffness k.Determine the natural period of vertical vibration(Figure 1)Express your answer in terms of some or all of the variables m, k, and constant pi. MA.7.AR.4.1Johnny and Eleanor went to their local gas station to collect information about the cost offuel for compact cars. They observed both regular and premium gas purchases that day andrecorded their data in the table below.Gallons Purchased 11.5 7.21014.3 6.89.7Cost$25.23 $15.80 $21.94 $40.63 $14.92 $27.56Part A. Is there a proportional relationship between the number of gallons of gas sold andthe cost? Explain your answer.Part B. If the relationship is not proportional, which data value or values should bechanged to make the relationship proportional? What could explain thisdifference? true or false ceteris paribus, a balanced budget would alleviate the effects of a recessionary gdp gap. lucina is painting with a small brush in each hand. to do this movement, she needs activation via the _____ tract. if a country has a deficit in its current account, there will be a surplus in the financial account (formerly called capital account)T/F what are some of the benefits and drawbacks of job specialization some of the departments in procter & gamble are tide, pampers, charmin, and pringles. this is an example of departmentalization by product. T/F? heights of men on a baseball team have a bell-shaped distribution with a mean of Use technology to find points and then graph the function y=x - 4 following the instructions below.Plot at least four points with integer coordinates that fit on the axes below. Click a point to delete it. requiring employees to wear uniforms enhances consumers positive feelings toward the brand, regardless of the employees service quality. T/F? when a repair service company performs repairs on a customers broken refrigerator, the service company is said to be providing the type of service known as state utility. True or false?