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Suppose the rate of return on short-term govemment securities (perceived to be risk-free) is about 5%. Suppose also that the expected rate of return required

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Suppose the rate of return on short-term govemment securities (perceived to be risk-free) is about 5%. Suppose also that the expected rate of return required by the market for a portfolio with a beta of 1 is 14%. According to the capital asset pricing model, suppose you consider buying a share of stock at $52. The stock is expected to pay $3.5 dividends next year and you expect it to sell then for $55. The stock risk has been evaluated at =5. Is the stock overpriced or underpriced? Insert - 1 for underpriced, 1 for overpriced, and 0 otherwise

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