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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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