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You are considering three securities; Stock A, Stock B and Stock C. The following information is given by your broker: Rosita invest in the following
You are considering three securities; Stock A, Stock B and Stock C. The following information is given by your broker: Rosita invest in the following sums of money in common stocks having expected returns and beta as follows: (a) Calculate the expected return and the beta for her portfolio. [Answer =15.99%,0.87] (b) At present, suppose the risk-free rate is 10% and the expected return on the market portfolio is 15%. On the basis of this information: i. Which stocks are overvalued and undervalued? ii. Is the portfolio is overpriced or underpriced
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