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The following information relates to questions 20 and 21 . In an economy, market risk premium is 10% over the risk-free rate of return of

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The following information relates to questions 20 and 21 . In an economy, market risk premium is 10% over the risk-free rate of return of 4.5%. A portfolio manager observes two securities, E and F, with the systematic beta coefficients 0.70 and 1.60 respectively. The manager has also calculated realised returns from both the securities and found that the realised return from security- E is 12.50% and from security- F is 15.10%. Question 20 Question 20 4 pts Using the capital asset pricing model (CAPM), find the expected rate of returns from security-E and security- F. 10:17 am Question 21 2 pts Identify which of securities E and F is underpriced and/or overpriced

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