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The risk-free rate is 5%, and stock X is fairly priced, and it has a beta of 1.5 and expected rate of return of 20%.
The risk-free rate is 5%, and stock X is fairly priced, and it has a beta of 1.5 and expected rate of return of 20%. For another stock Y, the beta is 0.8 and expected return of 14%. Which of the following statement is true about stock Y?
Question options:
| Y is underpriced |
| Y is overpriced |
| Y is fairly priced |
| none of the above |
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