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There are two stocks i.e. Stock OP and Stock QP. The beta of Stock OP and Stock QP is 1.35 and 0.80 respectively. Moreover, the
There are two stocks i.e. Stock OP and Stock QP. The beta of Stock OP and Stock QP is 1.35 and 0.80 respectively. Moreover, the expected return of Stock OP is 14 percent and that of Stock QP is 11.5 percent. Assume that the T-bills rate is 4.5 percent and the KSE-100 index's risk premium is 7.3 percent. Show calculations to check if these two stocks are correctly priced?
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