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The risk-free interest rate is 8%, and the required rate of return for the market portfolio is 15%. Investment As beta is 1.29 and expected
- The risk-free interest rate is 8%, and the required rate of return for the market portfolio is 15%. Investment As beta is 1.29 and expected return is 17.4%. Investment Bs beta is -0.86 and expected return is 1.7%. Are investments A and B under- or over-valued?
- Investment A is overvalued and investment B is undervalued
- Investment A is undervalued and investment B is overvalued
- Both are undervalued
- Both are overvalued
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby
4th edition
978-0073369709, 73369705, 78025370, 978-0077444846, 77444841, 978-0078025372
