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The risk-free rate is 4.2 percent and the expected return on the market is 12.3 percent. Stock A has a beta of 1.2 and an
The risk-free rate is 4.2 percent and the expected return on the market is 12.3 percent. Stock A has a beta of 1.2 and an expected return of 13.1 percent. Stock B has a beta of 0.75 and an expected return of 11.4 percent. Are these stocks correctly priced? Why or why not? O No, Stock A is underpriced and Stock B is overpriced. O No, Stock A is overpriced and Stock B is underpriced. O No, Stock A is overpriced but Stock B is correctly priced. O Yes, both stocks are correctly priced
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