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In the market, Security A is observed with an expected rate of return of 15% and a beta of .95. The market expected rate of

In the market, Security A is observed with an expected rate of return of 15% and a beta of .95. The market expected rate of return is 12%, and the risk-free rate is 5%.

(1) According to the capital asset pricing model, is Security A overpriced/underpriced/fairly-priced?

(2) Is it located above/under/on the SML? (3) If mispriced, compute its abnormal return.

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