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Use the following information. The risk-free rate is 1%. a) Find LCD's beta using the market model (Regression). (3 pts) b) Draw the security market
Use the following information. The risk-free rate is 1%. a) Find LCD's beta using the market model (Regression). (3 pts) b) Draw the security market line. Use the average of rm. (3 pts) c) If a stock that has a beta of 0.8 is currently expected to earn 5%, is the stock overvalued or undervalued? What is expected to happen to the stock's price and return? ( 3 pts) Use the following information. The risk-free rate is 1%. a) Find LCD's beta using the market model (Regression). (3 pts) b) Draw the security market line. Use the average of rm. (3 pts) c) If a stock that has a beta of 0.8 is currently expected to earn 5%, is the stock overvalued or undervalued? What is expected to happen to the stock's price and return? ( 3 pts)
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