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From the following data identify the underpriced and overpriced stocks using CAPM approach. Security Expected rate of return Beta A 32 1.5 B 30 2

From the following data identify the underpriced and overpriced stocks using CAPM approach.

Security

Expected rate of return

Beta

A

32

1.5

B

30

2

Stock Index- Market

12

1

Risk free rate

5

0

a.

Both are over priced

b.

Cannot be determined

c.

Both are under priced

d.

None

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