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3 . Stock Y has a beta of 1 . 3 and an expected return of 1 5 . 3 % . Stock Z has

3. Stock Y has a beta of 1.3 and an expected return of 15.3%. Stock Z has a beta of 0.7 and an expected return of 9.3%. If the risk-free rate is 5.5% and the market risk premium is 6.8%, are these stocks correctly priced? If not, underpriced or overpriced? Show your calculations. (6 points)

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