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What would be the expected return for Deakin Ltd shares

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Question - Deakin Ltd has a beta equal to 0.8. If the expected return on the ASX300 is 12% p.a. and the return on 10 year Commonwealth Government Bonds is 4% p.a.

(i) What would be the expected return for Deakin Ltd shares?

(ii) Currently its shares are traded at $120, an increase of 10% from last year. Are its shares currently overpriced? Explain your answer using the SML?

Reference no: EM132715500

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