Solve the required rate of return on a security with a beta

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The risk-free rate is 3% and the expected rate of return on the market portfolio is 8%.

Problem a. Calculate the required rate of return on a security with a beta of 2.16. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Problem b. If the security is expected to return 13%, is it overpriced or underpriced?

Reference no: EM132741581

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