The risk-free rate is 4%. The expected market rate of return is 11%. If you...
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The risk-free rate is 4%. The expected market rate of return is 11%. If you expect CAT with a beta of 1.0 to offer a rate of return of 11%, you should:
buy CAT because it is overpriced
sell short CAT because it is overpriced
sell stock short CAT because it is underpriced
buy CAT because it is underpriced
hold CAT because it is fairly priced
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