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Reddi Plc is a car manufacturer. Reddi shares have a beta of 0.9. A security analyst who specialises in studying car manufacturers expects its return
Reddi Plc is a car manufacturer. Reddi shares have a beta of 0.9. A security analyst who specialises in studying car manufacturers expects its return to be 13%. Suppose that the risk free rate is 8% and the market-risk premium is 6%. Is the analyst pessimistic or optimistic about this firm relative to the markets expectations? Support your answer with appropriate calculations.
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