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Calculate the required rate of return on a security

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Reference no: EM132515835

The risk-free rate is 7% and the expected rate of return on the market portfolio is 14%.

a. Calculate the required rate of return on a security with a beta of 1.25. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. If the security is expected to return 17%, is it overpriced or underpriced?

Reference no: EM132515835

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