A stock that historically earned 10% per year has a CAPM Beta of 1.2 and...
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A stock that historically earned per year has a CAPM Beta of and an SMB beta of If the riskfree rate has been reliably per year and will likely remain so while the equity risk. premium is expected to be and the SMB premium which of the following situations do you believe will occur and why? A Investors that trust the CAPM will sell the stock to investors that trust a factor model including SMB because the sellers will perceive the stock overvalued and the buyers fairly valued B Investors that trust the CAPM will buy the stock from investors that trust a factor model including SMB because the seliers will perceive the stock overvalued and the buyers fairly valued C Investors that trust the CAPM will sell the stock to investors that trust a factor model including SMB because the sellers will perceive the stock overvalued and the buyers undervalued D Investors that trust the CAPM will buy the stock from investors that trust a factor model including SMB because the sellers will perceive the stock overvalued and the buyers undervalued E Either investor type might sell to the other as they will both perceive the stock as fairly valued and only trade on liquidity demands 
A stock that historically earned per year has a CAPM Beta of and an SMB beta of If the riskfree rate has been reliably per year and will likely remain so while the equity risk. premium is expected to be and the SMB premium which of the following situations do you believe will occur and why?
A Investors that trust the CAPM will sell the stock to investors that trust a factor model including SMB because the sellers will perceive the stock overvalued and the buyers fairly valued
B Investors that trust the CAPM will buy the stock from investors that trust a factor model including SMB because the seliers will perceive the stock overvalued and the buyers fairly valued
C Investors that trust the CAPM will sell the stock to investors that trust a factor model including SMB because the sellers will perceive the stock overvalued and the buyers undervalued
D Investors that trust the CAPM will buy the stock from investors that trust a factor model including SMB because the sellers will perceive the stock overvalued and the buyers undervalued
E Either investor type might sell to the other as they will both perceive the stock as fairly valued and only trade on liquidity demands
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