Solving Some Simple Problems Using The Capital Asset Pricing Model (CAPM)

In this video, I solve a few simple problems using the CAPM to figure out the expected rate of return on a stock or a portfolio of stocks. I also show how these calculations can be used to determine whether a stock is underpriced or overpriced, based on what CAPM suggests to be the "fair" rate of return on a stock.
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My name is Atif Ikram. I am a Professor of Finance at Arizona State University (wpcarey.asu.edu/people/profil....
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[@practicallemonch1k649]

Prof, tnx for the video! There is a mistake in calculations in Problem 1: E(R) actually equals 4% + 1.38(5%) = 10.9%, not 20%.

[@ninajo5323]

my calculation based on the formula is E(R) = 4% +1.39*(5%-4%) = 5.38%