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Open-end question. Show your work. Provide enough detail so that I can follow your logic to earn credit. After careful consideration, you have determined that
Open-end question. Show your work. Provide enough detail so that I can follow your logic to earn credit.
After careful consideration, you have determined that you expect AMZN to earn 17% return over the next year. The market's expected return is 12% and the risk free rate of return is 4%. Will this stock outperform compared to the CAPM based on your expectations, if its beta is 2? Does the stock plot above or below the SML? Is it considered under- or overpriced?
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