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The risk-free rate is 7 percent, and the expected return on the market is 12%. Stock A has the following Characteristics: Bela of 1.27, and

The risk-free rate is 7 percent, and the expected return on the market is 12%. Stock A has the following Characteristics: Bela of 1.27, and an expected return of 15.5%. Stock B has a beta of .90 and an expected return of 11.5 percent. Are these stocks correctly priced, or over/underpriced and why?

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