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Stock A has a beta of 1.2 and Stock Bs beta is 0.8. Stock As expected return is 11.1% and Stock Bsexpected return is 7.85%.

  1. Stock A has a beta of 1.2 and Stock Bs beta is 0.8. Stock As expected return is 11.1% and Stock Bsexpected return is 7.85%. Risk free rate is 2% and market premium is 7.2%. Are the stocks correctly priced? Which one is expensive relative to the other one?

PLEASE EXPLAIN IN DEATELED WAY AND WITH YOUR OWN WORDS ATLEAST 500 WORDS OR MORE IF YOU CAN THANKS

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