huangxiaoxie

That is it.....Think of it this way......the capm is the required return...as you have shown above the expected is above required..therefore you would buy the "undervalued" stock.

Note: to avoid confusion,,,,,you now have the 11 & 10% the different way from your first post in this thread.



Edited 1 time(s). Last edit at Tuesday, May 3, 2011 at 03:35PM by perdition.