The risk-free rate is 4% and the expected rate of return on the market portfolio is 9%.
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| The risk-free rate is 4% and the expected rate of return on the market portfolio is 9%. |
| a. | Calculate the required return of a security with a beta of 1.21 and an expected rate of return of 13%.(Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Required return | % |
| b. | Is the security overpriced or underpriced? | ||
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