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Suppose you invested in stock WMT , which has following information: Beta = 0 .8 5 ; risk-free rate = 4 percent; market r ate
Suppose you invested in stock WMT, which has following information: Beta = 0.85; risk-free rate = 4 percent; market rate of return = 12 percent. However, based on the stock price, this stock actually gives 12 percent return. What should be the return of this stock? Is it underpriced or overpriced? How?
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