Expected return on the market portfolio

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Currently the risk-free rate is 6% and the expected return on the market portfolio is 11%, the expected return for 3 stocks as priced in the market are listed below with their estimate of beta.

Stock ... Expected Return ..... Beta

X .................... 14% .............. 1.5

Y .................... 12% .............. 2.0

Z .................... 10% .............. 0.8

Which of these stocks is underpriced?

Reference no: EM13938542

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