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Assume the risk-free rate of return is 6.5 percent and the market rate of return is 11.2 percent. Stock A with a beta of 0.88
Assume the risk-free rate of return is 6.5 percent and the market rate of return is 11.2 percent. Stock A with a beta of 0.88 and an expected return of 9.79 percent; Stock B with a beta of 1.26 and an expected return of 11.36 percent; Stock C with a beta of 1.47 and an expected return of 12.28 percent; Stock D with a beta of 0.79 and an expected return of 10.61 percent. Which one of the following stocks, if any, is correctly priced according to CAPM?
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