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Suppose the rate of return on short-term government 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 government 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: a. What is the expected rate of return on the market portfolio? (Round your answer to 2 decimal places. Omit the "%". sign in your response.) Expected rate of return b. What would be the expected rate of return on a stock with B 0? (Round your answer to 2 decimal places. Omit the'%" sign in your response.) Expected rate of return c. 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 B5. Is the stock overpriced or underpriced? Overpriced O Underpriced

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