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2. Suppose the yield on short-term government securities (perceived to be risk-free) is about 4% Suppose also that the expected retum required by the market

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2. Suppose the yield on short-term government securities (perceived to be risk-free) is about 4% Suppose also that the expected retum required by the market for a portfolio with a bota of 1 is 8.0% Suppose you consider buying a share of stock at a price of $100. The stock is expected to pay a dividend of S2 next year and to sell then for $105. The stock risk has boen evalunted at 8 - 1.5. Is the stock underpriced, fairly priced, or overpriced? Should you buy, sell, or hold the stock? Show detailed calculations leading to your answers MacBook Pro 88 3 DOO 80 30 2 A $ C 9 & 7 % 5 0 8 6 3 4 0 Y U T E R L H G D F

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