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The following table shows the beta and expected return of 5 risky assets in the market Actual expected return Beta iM Stock 1 Stock 2

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The following table shows the beta and expected return of 5 risky assets in the market Actual expected return Beta iM Stock 1 Stock 2 Stock 3 Stock 4 Stock 5 1.2 1.0 0.7 0.4 0.1 0.124 0.110 0.103 0.068 0.047 You are given that all of these stocks except one lie on the security market line (SML) Calculate the Jensen alpha and Treynor ratio of the stock that does not lie on the security market line. Should an investor invest into this stock? Explain your

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