You estimate the CAPM equation for stock X with a regression, and you find that...
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You estimate the CAPM equation for stock X with a regression, and you find that stock X has a negative alpha. Then you should _________.
| sell short stock X because it is overpriced | ||
| sell short stock X because it is underpriced | ||
| buy stock X because it is underpriced | ||
| buy stock X because it is overpriced |
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