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The common stock of Ollivander's Inc. has a beta of 1.16 and an actual expected return of 11.24 percent. The risk-free rate of return is

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The common stock of Ollivander's Inc. has a beta of 1.16 and an actual expected return of 11.24 percent. The risk-free rate of return is 2.6 percent and the market rate of return is 10.74 percent. Which one of the following statements is true given this information? The actual expected stock return indicates the stock is currently underpriced. The stock has less systematic risk than the overall market. The actual expected return will graph above the Security Market Line The stock is correctly priced according to CAPM. The actual expected stock return indicates the stock is currently overpriced

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