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Is stock a underpriced or overpriced

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Reference no: EM132478343

Assume CAPM holds and use the following information:

Expected Return

Market 14%

Stock A 15%

Standard Deviation

31% (offered return)

Stock A 30%

Risk-free rate=5%, COV(M,A)=6%

Is stock A underpriced or overpriced?

Reference no: EM132478343

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