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Following information is available regarding four common stocks. Return of market portfolio is 15% per annum and risk-free rate is 6% per annum. Stock Beta
Following information is available regarding four common stocks. Return of market portfolio is 15% per annum and risk-free rate is 6% per annum. Stock Beta Alpha A 1.02 -0.68 B 0.65 0.55 C 1.13 0 D 0.32 0.2 a. Calculate implied return and required rate of return of the stocks b. Decide whether the assets are overpriced underpriced or fairly priced and explain the logical basis on which you arrive on your decision
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