If the risk-free rate is 515 percent and the market risk


Stock Y has a beta of 1.25 and an expected return of 13.9 percent. Stock Z has a beta of .90 and an expected return of 12.3 percent.

If the risk-free rate is 5.15 percent and the market risk premium is 7.65 percent, are these stocks overvalued or undervalued?

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Financial Management: If the risk-free rate is 515 percent and the market risk
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