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Under the CAPM, stock ABC has a beta of 1.3. The market risk premium is 7% and the risk-free rate is 2%. Based on your

Under the CAPM, stock ABC has a beta of 1.3. The market risk premium is 7% and the risk-free rate is 2%. Based on your own fundamental analysis, you expect Stock ABC to return 10% over the next year. Given your forecast, you expect an alpha of ___________________ and you should __________________ the stock.

A -1.1%,short

B -1.1%,buy

C 1.1%,buy

D 1.1%,short

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