Probability that boston mark stock is currently overvalued

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Boston Mark.com stock has an estimated beta of 1.5. The stock pays no dividend and is not expected to pay one for the foreseeable future. The current price of the stock is $50. You expect this price to rise to $60 by the end of the coming year. You believe that the distribution of possible year-end prices is approximately normal with a standard deviation of $2.50.

The risk-free rate of return is currently 4 percent and the market risk premium is 8.8 percent. What is the probability that Boston Mark.com's stock is currently overvalued?

Reference no: EM131338615

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