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Stock Y has a beta of 1.5 and an expected return of 16 percent. Stock Z has a beta of 0.95 and an expected return

Stock Y has a beta of 1.5 and an expected return of 16 percent. Stock Z has a beta of 0.95 and an expected return of 12.5 percent.

Required:

If the risk-free rate is 4.95 percent and the market risk premium is 7.45 percent, are these stocks correctly priced?

Stock Y ?
Stock Z ?

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