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Stock XYZ has   an expected return of 6.0%. The S&P500 has an expected return of 7.0%....

Stock XYZ has   an expected return of 6.0%. The S&P500 has an expected return of 7.0%. The riskless rate is 2.0% and XYZ's beta is 10.0. Is XYZ overpriced or underpriced according to CAPM? Answer 1 for underpriced and -1 for overpriced.

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Answer #1

I have solved the question based on the information you have provided i.e. beta = 10.0, which is highly unlikely.If there is any typing error in question please let me know i will solve it accordingly.

Please upvote if the ans is helpful.In case of doubt,do comment.Thanks.

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