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The risk-free rate is 7 percent. The expected market return is 15 percent. If you expect a stock with a beta of 1.3 to offer

The risk-free rate is 7 percent. The expected market return is 15 percent. If you expect a stock with a beta of 1.3 to offer a rate of 12 percent, you should:

Question 10 options:

Buy the stock because it is overpriced

Sell the stock because it is overpriced

Buy the stock because it is underpriced

Sell the stock because it is underpriced

None of the above, as the stock is fairly-priced

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