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  3. you have analyzed the following four securities an

You have analyzed the following four securities and have estimated each security?s beta and what...

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Accounting

You have analyzed the following four securities and have estimated each security?s beta and what you expect each security to return next year. The expected return on the market portfolio is 12%, and the relevant risk-free rate is 5%.

Security

Beta

Expected return (based on your analysis)

A

-0.25

3.25%

B

1.10

12.10%

C

0.75

9.75%

D

2.00

19.50%

Refer to the information above. Based on your analysis, which of the securities is correctly priced?

A) Security A

B) Security B

C) Security C

D) Security D

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