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What is the expected return of wegrow stock

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Reference no: EM132465619

Problem: WeGrow Inc. stock beta is 2.3. The one-year Treasury bill ($100 face value, risk-free) currently trades for $97.0874. The expected market return is 7%.

a. What is the expected return of WeGrow's stock? 

b. Draw a Security Market Line (SML) using the risk-free asset, market, and WeGrow. Briefly describe what SML shows.

c. You noticed that WeGrow stock currently plots below the SML. Clearly state whether the current WeGrow stock is overpriced or underpriced.

Reference no: EM132465619

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