1. Invetors expect the market rate of return this year to be 14%.A stock with a beta of .8 has an expected rate of return at 12%.Although the risk free rate is not changed,the actual market return drops to 10%.a Security with a beta of 1.25 Yields a return of 11%.iS it overpriced or underpriced?
2. Suppose a stock had an initial price of $52 per share, paid a dividend of $1.45 per share during the year, and had an ending share price of $69. Compute the percentage total return.
3. The expected return for OK Energy is 7.8% and the risk-free rate is 1.6%. The beta for OK Energy, Inc. is 1.4. If the CAPM/SML is correct, what is the expected return on the market (Rm)?