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You have analyzed the following four securities and have estimated each securitys beta and what you expect each security to return next year. The expected
You have analyzed the following four securities and have estimated each securitys beta and what you expect each security to return next year. The expected return on the market portfolio is 8%, and the relevant risk-free rate is 3%. Security Beta Expected return A 1.30 10.00% B 0.90 7.00% C 0.50 6.00% D 1.80 12.00% Based on your analysis, which of the securities is correctly priced? Security A Security D Security C Security B
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