Which One of the Following Stocks Is Correctly Priced If

Multiple Choice

Which one of the following stocks is correctly priced if the risk-free rate of return is 2.5% and the market risk premium is 8%? $$\begin{array} { l r c } \underline{\text { Stock } }& \underline{ \text { Beta } }& \underline{\text { Expected Return } }\\\text { A } & .68 & 8.2 \% \\\text { B } & 1.42 & 13.9 \% \\\text { C } & 1.23 & 11.8 \% \\\text { D } & 1.31 & 12.6 \% \\\text { E } & .94 & 9.7 \%\end{array}$$

A) A
B) B
C) C
D) D
E) E