question archive Suppose that a risky asset with a beta of 1,5 is offering a return of 20%

Suppose that a risky asset with a beta of 1,5 is offering a return of 20%

Subject:AccountingPrice:2.84 Bought3

Suppose that a risky asset with a beta of 1,5 is offering a return of 20%. Risk-free rate is 2% and market risk is 14%. Is the asset fairly priced in the market?

  1. Yes, it is fairly priced.
  2. No, it is overvalued.
  3. No, it is undevalued.
  4. We cannot retrieve the answer with this information.

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