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HW 5 Due: Feb 26 1. Suppose the Security Market Line (SML) has vertical intercept 0.03 and slope 0.12. (1) What is the required return

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HW 5 Due: Feb 26 1. Suppose the Security Market Line (SML) has vertical intercept 0.03 and slope 0.12. (1) What is the required return on the market portfolio? (ii) Suppose Stock A has beta 0.8 and expected return 10%. Is Stock A overpriced or underpriced? Carefully explain a trading strategy that exploits this situation, and specify the strategy's expected profit

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