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Suppose you believe that the CAPM is true for all stocks, and you observe a stock with a very high Price to Earnings (P/E) ratio

Suppose you believe that the CAPM is true for all stocks, and you observe a stock with a very high Price to Earnings (P/E) ratio relative to other stocks in the market. What of the following must be true about this stock?

None of the other answers are correct

The stock has a negative alpha

The stock has a positive alpha

The stock has a low beta.

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