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(b) You are convinced your company which has a beta of 1.4 will earn a return of 15% the coming year. It is Observed that

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(b) You are convinced your company which has a beta of 1.4 will earn a return of 15% the coming year. It is Observed that the expected rate of return on the market is 13% and the rate on T-Bills is 4%. Based on your firm's level of risk, determine the return it should earned and establish and based on your position state, giving reasons if the firm over or under valued. (7 marks)

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