Calculate the required rate of return on security

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Reference no: EM132014891

The risk-free rate is 5% and the expected rate of return on the market portfolio is 10%

a. Calculate the required rate of return on a security with a beta of 1.23. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. If the security is expected to return 12%, is it overpriced or underpriced?

Overpriced

Underpriced

Reference no: EM132014891

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