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The rate of return on a short - term government securities was about 5 % . Suppose the expected rate of return required by thr

The rate of return on a short-term government securities was about 5%. Suppose the expected rate of return required by thr market for a portfolio with a beta measure of 1 is 12%. according to the capital assest pricing model: (c) Suppose you consider buying a share of stock at $40. The stock is expected to pay $3
dividends next year and you expect it to sell then for $41. The stock risk has been evaluated
by b=-0.5. Is the stock overpriced or underpriced?
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