question archive The risk-free rate is 4%
The risk-free rate is 4%
Subject:FinancePrice:2.88 Bought10
The risk-free rate is 4%. The expected world market rate of return is 12%. If you expect stock X with a world market beta of 1.0 to offer a rate of return of 10%, according to the World CAPM, you should A. buy stock X because it is overpriced. B. short stock X because it is overpriced. C. short stock X because it is underpriced. D. buy stock X because it is underpriced. E. None of the options, as the stock is fairly priced
