The risk-free rate of return and market rate of return

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Reference no: EM131514956

Campiti Inc. stock has a beta of .91 and an expected return of 10.21 percent. The risk-free rate of return is 3.60 percent and the market rate of return is 11.84 percent. Which one of the following statements is true given this information?

A. Campiti stock is underpriced.

B. The expected return on Campiti stock based on the capital asset pricing model is 9.88 percent.

C. The return on Campiti stock will graph below the security market line.

D. Campiti stock is correctly priced.

Reference no: EM131514956

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