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1017 estion 1 A stock has a beta of 1.2. The risk free rate is 5% and the market return is 10%. By using the

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1017 estion 1 A stock has a beta of 1.2. The risk free rate is 5% and the market return is 10%. By using the capital asset pricing model (CAPM)wer the following questions wide www 1. How much is the required rate of return that the stock needs to yield? 2. How much is the market risk premium? 3. How much is the risk premium of this stock? 4. Assuming that the actual return on the stock is 11% currently. Is this stock correctly priced? Eartha nhar nass ALT+F10 (PC) or ALT+FN+F10 (Mac)

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