Stock a has a beta of 119 and an expected rate of return of, Ask an Expert

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Stock A has a beta of 1.19 and an expected rate of return of 13.42 percent. The market risk premium is 8.2 percent and the risk-free rate is 4.1 percent. Which one of the following statements related to Stock A is correct? WHY?

a) Stock A is overpriced?

b) Stock A is underpriced?

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Financial Management, Finance

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