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You are curently evaluating - potentlal stock purchase. As you are gathering infarmation ubout the stock you notice a few things. Fist, you see that
You are curently evaluating - potentlal stock purchase. As you are gathering infarmation ubout the stock you notice a few things. Fist, you see that the expected rate of return on the market is 12%, and the risk free rate is 5%. The stock you are interested in has a beta of 2.6, and is currently priced to yield a retum on 20% (expected return), If this is true then, what must also be true? Select one: a. The stock is underpriced b. The stock is fairly priced c. The stock lies above the SML d. The stock is overpriced e. The stock lies on the SML
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