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The common stock of Krusty Krab Corp. has a beta of 1.21 and an actual expected return of 16.07 percent. The risk-free rate of return

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The common stock of Krusty Krab Corp. has a beta of 1.21 and an actual expected return of 16.07 percent. The risk-free rate of return is 4.4 percent and the market rate of return is 13.67 percent. Which one of the following statements is true given this information? The actual expected stock return indicates the stock is currently overpriced. The stock is correctly priced according to CAPM. The stock has less systematic risk than the overall market. The actual expected return will graph below the Security Market Line. The actual expected stock return indicates the stock is currently underpriced

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