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Gooddealstock has a beta of 1.97. The expected return on Gooddeal is 18.25% while the expected return on the market portfolio is only 10%. The
Gooddealstock has a beta of 1.97. The expected return on Gooddeal is 18.25% while the expected return on the market portfolio is only 10%. The risk-free rate is 4%. Because Gooddeal lies ____ the SML, it is considered _______.
A. below; overpriced
B. below; underpriced
C. above; underpriced
D. above; overpriced
E. on; correctly priced
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