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Stock Y has a beta of 1.25 and an expected return of 9.6%. Stock Z has a beta of 0.68 and an expected return of
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Stock Y has a beta of 1.25 and an expected return of 9.6%. Stock Z has a beta of 0.68 and an expected return of 7.9%. If the risk-free rate is 3% and the market risk premium is 6.8%, then based on the reward-to-risk ratios, Stock Y is __________ valued and Stock Z is __________ valued.
Under; over
Over; over
Under; correctly
Correctly; over
Over; under
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