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Suppose you observe the following situation Security Beta Expected Return Sanders 1.8 22% Janicek 1.6 20.44% If the risk-free rate is 7 percent, are these

Suppose you observe the following situation

Security	Beta	Expected Return
Sanders	1.8	22%
Janicek	1.6	20.44%

If the risk-free rate is 7 percent, are these two stocks correctly priced relative to each other? What must the risk-free rate be if they are correctly priced?

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