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Which one of the following stocks is over-priced if the risk-free rate of return is 3.0 percent and the market risk premium is 7.5 percent?
Which one of the following stocks is over-priced if the risk-free rate of return is 3.0 percent and the market risk premium is 7.5 percent? Stock Beta Expected Return A .66 9.25 % B 1.12 8.57 C 1.27 15.63 D 1.46 13.95 E 1.45 17 Hint: A stock is "over-priced" means the observed expected return of the stock is lower than what is required by investors based on CAPM
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