Risk-Free Rate of Interest on Govt. Treasury Bonds 5.5%, Average Return on Market Portfolio 18%. Beta is 1.8. Security is said to be overpriced, if actual return is :

CS Executive · Corporate and Management Accounting · PYQS · December 2020
Risk-Free Rate of Interest on Govt. Treasury Bonds 5.5%, Average Return on Market Portfolio 18%. Beta is 1.8. Security is said to be overpriced, if actual return is :
(A) 29%
(B) 28%
(C) 27%
(D) None of the above

Answer & Explanation:

Correct Answer: Option (C)

Official answer key: (C).

Topics: Financial Management

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