The risk-free rate is 3.6%, and the expected market return is 7.5%. A stock with a beta
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Question:
The risk-free rate is 3.6%, and the expected market return is 7.5%. A stock with a beta of 1.2 is selling for $25 and will pay a $1.2 dividend at the end of the year. If the stock is priced at $30 at year-end, is it over priced or under priced?
Expert Answer:
Lets calculate the expected return using the Capital Asset Pricing Model CAPM ... View the full answer
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