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5. Within the context of the capital asset pricing model (CAPM), assume: Expected return on the market = 15%. Risk-free rate = 8%. Actual return

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5. Within the context of the capital asset pricing model (CAPM), assume: Expected return on the market = 15%. Risk-free rate = 8%. Actual return on XYZ security = 17%. Beta of XYZ security = 1.25. Which one of the following is correct? a. XYZ is overpriced. b. XYZ is fairly priced. C. XYZ's alpha is 2.25%. d. XYZ's alpha is 0.25%

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