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Q. No. 3 Currently, the risk-free rate is 15 percent and the expected return on the market portfolio is 20 percent. Market analysts' return expectations
Q. No. 3 Currently, the risk-free rate is 15 percent and the expected return on the market portfolio is 20 percent. Market analysts' return expectations for four stocks are listed here, together with each stock's expected beta. STOCK Expected return Expected beta Stillman Zinc Corporation 20% 1.5 Union Paint Company 15. 1 1 National Automobile Company 16.5 1.3 Parker Electronics, Inc 19.0 1.9 If the analysts' expectations are correct, which stocks (if any) are over valued and which (if any) are undervalued. 4
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