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You believe that Ace stock is mispriced. The stock has a beta of 1 . 2 and you believe the stock will provide a return
You believe that Ace stock is mispriced. The stock has a beta of and you believe the stock will provide a return of this year. Tbills are paying and the market portfolio is paying Given this data, which one of the following statements is correct? Think about this one
a You should buy Ace stock because its expected return is higher than the return on the market portfolio, ensuring that it will make money.
b You should buy Ace stock because it is undervalued.
c You should sell Ace stock because its required return is only
d You should sell Ace stock because its return per unit of risk is lower than for the market.
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