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Assume you estimate the annual return for Facebook stock to be 15% using a relative valuation approach. Calculate the required return using the CAPM and
Assume you estimate the annual return for Facebook stock to be 15% using a relative valuation approach. Calculate the required return using the CAPM and determine if Facebook is over, under, or properly valued. Use rf=2%, rm=8%, beta=2. Select one:
a. over valued
b. fairly valued
c. under valued
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