A stock's beta is 1.4, its standard deviation is 30% and you expect that it will earn 14% expected return. The risk free rate is 2% and the market's expected risk premium is 8%. The stock plots ____________ (above/below) the SML and according to the CAPM it is _____________ (underpriced/overpriced). The stock's Jensen's alpha is ___________% (rounded to two decimals), its Treynor measure is _____________ (no units,use numbers in decimals to calculate) and is Sharpe ratio is ___________ (no units,use numbers in decimals to calculate).
Beta = 1.4 S.D= 30% or 0.3 R = 14% Rf... View the full answer