You have been provided with the following data about the securities of three firms, the market...

You have been provided with the following data about the securities of three firms, the market portfolio, and the risk-free asset:

Security	Expected return	Standard deviation	Correlation with the market portfolio	Beta
Firm A	0.10	0.31	? (a)	0.85
Firm B	0.14	?(b)	0.50	1.40
Firm C	0.16	0.65	0.35	?(c)
The market portfolio	0.12	0.20	?(d)	?(e)
The risk-free asset	0.05	?(f)	?(g)	?(h)

Fill in the missing values in the table. Show your work please.
Is the stock of firm A correctly priced according to the CAPM? Firm B? Firm C? If these securities are not correctly priced, what is your investment recommendation for someone with a well-diversified portfolio?

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jeff jeffy answered 2 weeks ago

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