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ABC Company s stock earned a return of 1 0 % this past year. Investors required return for this stock based on the SML equation

ABC Company

s stock earned a return of

10 %

this past year. Investors

required return for this stock based on the SML equation was

9 % .

Where would this stock plot on the SML

?

What can you say about this investment

s alpha? Explain

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