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Q10: Capital Asset Pricing Model predicts that the expected return on a stock of Funny Co. is 16%. The stock is expected to pay a

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Q10: Capital Asset Pricing Model predicts that the expected return on a stock of Funny Co. is 16%. The stock is expected to pay a dividend of $2 in the next year which will grow at 2% after that indefinitely. The Stock is currently selling at $20.a) is the Stock overpriced or underpriced? (5 points)b) What is the equilibrium price? (5 points)

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