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A stock has a beta () of 0.7 and an expected rate of return of 10%. The expected rate of return on the market (E(RM))

A stock has a beta () of 0.7 and an expected rate of return of 10%. The expected rate of return on the market (E(RM)) is 13% and the risk-free rate (Rf) is 5%. Is the stock over-valued or under-valued? Should you buy the stock? What is your recommendation?

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