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3. Stock A has a beta of 2.04 and an anticipated return of 16.25%. Stock Z has a beta of 1.19 and an anticipated return

3. Stock A has a beta of 2.04 and an anticipated return of 16.25%. Stock Z has a beta of 1.19 and an anticipated return of 12.32%. If the risk free rate is 3.75% and the expected market risk premium is 7.91%, are these two stock underpriced and why? [6 points]

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