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A firm's class A common shares are currently trading for $14.38 on the Toronto Stock Exchange. The risk free rate prevailing in the market is

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A firm's class A common shares are currently trading for $14.38 on the Toronto Stock Exchange. The risk free rate prevailing in the market is currently 4%, the expected return on the market portfolio is 10%. The firm has a beta of 1.2 and is expected to pay a dividend of $2 forever. Under these conditions, the firm's common shares are currently O a Fairly priced O b. Under priced because the CAPM return is lower than its implied return Over priced because the CAPM return is lower than its implied return od Under priced because the CAPM return is higher than its implied return Over priced because the CAPM return is higher than its implied return O c. Oe. Clear my choice

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