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An analyst determines that three stocks have the following characteristics: Stock Beta, Forecast return X 1.0...

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Finance

An analyst determines that three stocks have the followingcharacteristics: Stock Beta, Forecast return X 1.0 10% Y 1.6 16 % Z2.0 14 % If the risk-free rate is 4% and the expected return on themarket is 10%, which stock is: Overvalued? .......Undervalued?...... Properly valued? ....... (Show your work)

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Risk free rate RF 4 and Expected return on market RM 10 For Stock X Beta 1 and Forecast return 10 Then according to CAPM Expected return of stock X RF Beta RM RF 4 110 4 4 6 10 Since    See Answer
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