A stock with a beta of 1.2 provides 15% return. The risk-free rate is 3%. The return on the market portfolio is 12%. Com

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answerhappygod
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A stock with a beta of 1.2 provides 15% return. The risk-free rate is 3%. The return on the market portfolio is 12%. Com

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A stock with a beta of 1.2 provides 15% return. The risk-freerate is 3%. The return on the market portfolio is 12%. Compute theexpected return according to the Capital Asset Pricing Model(CAPM). Compare this predicted return to the actual return andcomment whether the stock is overvalued or undervalued.
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