Are these stocks correctly priced

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Reference no: EM131995231

Stock A has a beta of 1.05 and an expected return of 13%. Stock B has a beta of 0.70 and an expected return of 9%.

If the riskfree rate is 5% and the market risk premium is 7%, are these stocks correctly priced? Illustrate your answers with graphs and explain clearly.

Reference no: EM131995231

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