Question: The observation is that a security now has a return rate of 0.12. It has a beta of 1.5. The risk-free rate is 0.05 and

The observation is that a security now has a return rate of 0.12. It has a beta of 1.5. The

risk-free rate is 0.05 and S&P 500 index fund expected rate of return is 0.09. According

to the Capital Asset Pricing Model, is this security fairly priced? If not, what should you

doas a rational investor? (15%)

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