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Design Interior's stock has an expected return of 11.00 percent and a beta of 1.4. The expected market return is 10.75 percent and the risk-free
Design Interior's stock has an expected return of 11.00 percent and a beta of 1.4. The expected market return is 10.75 percent and the risk-free rate is 4.0 percent. This stock is _____ because the CAPM return for the stock is _____ percent.
A) greatly overvalued; 13.45
B) slightly overvalued; 12.91
C) priced correctly; 13.25
D) slightly undervalued; 12.91
E) greatly undervalued; 13.45
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