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Suppose you observe the following situation: Security Beta Expected Return Cooley Inc. 1.4 10% Moyer Co. 1.0 8% Assume the risk-free rate is 3%, are
Suppose you observe the following situation:
| Security | Beta | Expected Return |
| Cooley Inc. | 1.4 | 10% |
| Moyer Co. | 1.0 | 8% |
Assume the risk-free rate is 3%, are the above two stocks correctly priced? Why or why not?
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