Calculate the expected return on the market

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Problem 1: A stock has an expected return of 24%, its beta is 1.75, and the risk-free rate is 2%. Calculate the expected return on the market. (Enter percentages as decimals and round to 4 decimals)

Problem 2: Stock Y has a beta of 1.6 and an expected return of 17%. The risk-free rate is 2% and the market risk premium is 10%. This stock is:

Option 1: overvalued

Option 2: correctly valued

Option 3: undervalued

Option 4: cannot be determined

Reference no: EM132946049

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