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Here are data on two companies

Finance

Here are data on two companies. The rate is 3%, and the market risk premium is 6%. Company CompanyA CompanyB Forecast return 10( Beta 1.3 0.8 
a) OWliffltv) What ‘‘ould be the fair return for each company, according to the capital asset pricing model (CAPM)? 
MitifteR) Is the stock of Company A overpriced or underpriced? Why? Is the stock of Company B overpriced or underpriced'? Why? 
 

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