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The market risk premium is 8% and the risk free rale is 4%. A stock with a beta of 3 has an expected return of

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The market risk premium is 8% and the risk free rale is 4%. A stock with a beta of 3 has an expected return of 16%. Which of the following statements is most correct: The stock is overpriced and it plots above the Security Market Line. The stock is correctly priced and plots on the Security Market Line The stock is underpriced and it plots above the Security Market Line. The stock is underpriced and it plots below the Security Market Line. The slock is overpriced and it plots below the Securty Market Line

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