QUESTIONS 115 THROUGH 120 RELATE TO PORTFOLIO MANAGEMENT

119. - MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM AFTERNOON 2012
MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM AFTERNOON 2012
119. Information about three stocks is provided below: Stock Expected Return BetaBooraem Inc. 12.85% 1.5Heisen Inc. 11.27% 1.1Gutmann Inc. 9.51% 0.8If the expected market return is 9.5% and the average risk-free rate is 1.2%, according to the capital asset pricing model (CAPM) and the security market line (SML), which of the three stocks is most likely overvalued? A. Heisen Inc. B. Booraem Inc. C. Gutmann Inc.