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Stocks A, B, and C have two risk factors with the following beta coefficients. The zero-beta return (lo) = .025 and the risk premiums for

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Stocks A, B, and C have two risk factors with the following beta coefficients. The zero-beta return (lo) = .025 and the risk premiums for the two factors are (11) - 12 and (12) = 10. Stock Factor 1 b 1 Factor 2 bi2 -0.25 1.1 B -0.05 0.9 0.01 0.06 Suppose that you know that the prices of stocks A, B, and C will be $10.95, 22.18, and $30.89, respectively. Based on this information Stock a is overvalued, stock bis overvalued, stock c is undervalued All three stocks are undervalued O Stock a is undervalued, stock bis properly valued, stock c is overvalued

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