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Assume that the CAPM holds. Although you currently own shares of two well-known securitie A and B, you are interested in improving upon your portfolio

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Assume that the CAPM holds. Although you currently own shares of two well-known securitie A and B, you are interested in improving upon your portfolio of assets. From the current available information, you are aware that the average historical market risk premium is 5.3% at that the return on T-Bills is 3%. You also have the following data: (A) Asset A is undervalued and therefore I will long the asset. (B) Asset B is overvalued and therefore I will short the asset. (C) Asset C is undervalued and therefore I will long the asset. (D) (A) and (C) are true. (E) None of the above

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