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Stock A has a level of systematic risk, Beta A = 1.5, and statistics show that the expected return on the market portfolio is 12%
Stock "A" has a level of systematic risk, Beta A = 1.5, and statistics show that the expected return on the market portfolio is 12% and the risk-free rate is 4%. If Stock "A" has a disequilibrium rate of return equal to 12%, you would...
A. Conclude that it is over-priced
B. Conculde that it is under-priced
C. Expect stock "A" to be sold in the market to restore equilibrium
D. Both A and C
E. Not enough information to tell
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