Question: CAPM and Mispricing . According to your favorite security analyst (who is very good at estimating betas, expected returns, and standard deviations): ABC,M= 0.3, [RABC]

CAPM and Mispricing.

According to your favorite security analyst (who is very good at estimating betas, expected returns, and standard deviations):

ABC,M= 0.3, [RABC] = 8%, E[RABC] = 10%, Rf= 8%, E[RM] = 16%, [RM]= 20%.

You accept the analyst's assessment of betas, expected returns, and standard deviations. The riskless asset is T-bills.Compared to its CAPM price, ABC is:

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