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An analyst gathers the following data: Expected rate of return on the market = 14% Current Dividend = $2 Growth rate in dividends = 6%

An analyst gathers the following data: Expected rate of return on the market = 14% Current Dividend = $2 Growth rate in dividends = 6% per year Risk Free Rate = 8% Expected rate of return on stock X if you buy at current price = 16% Stock Xs beta = 1.25 Using this data, is this stock underpriced or overpriced and by how much (in % return).

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