Expected rate of return on the market

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Reference no: EM131590311

The risk free rate is 5% and the expected rate of return on the market is 12%. A share of Duff Brewing Co. is now selling for exist8. It is expected to pay a dividend of $0.30 next year and to then sell for $8.50. Its beta is 0.8. According to the CAPM, is Duff fairly priced, underpriced, or overpriced? Explain.

Reference no: EM131590311

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