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Question 3: The expected rate of return on a market portfolio is 15 percent. The riskless rate of interest is 7 percent. The beta of

Question 3: The expected rate of return on a market portfolio is 15 percent. The riskless rate of interest is 7 percent. The beta of a company is 1.4. What is the required rate of return on this companys common equity? If the stock current return is 15 percent, is it undervalued or overvalued? Why?

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