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CBAs shares have a beta of 1.1, the 12 month risk free rate is 1.5%, and the expected return of market portfolio is 6%. However,
CBAs shares have a beta of 1.1, the 12 month risk free rate is 1.5%, and the expected return of market portfolio is 6%. However, its shares are currently priced to achieve 5.5% p.a. expected rate of return. Explain the position of CBAs shares relative to the Security Market Line, outline a buying or selling strategy for a rational investor based on this information and your calculation above.
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