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A Stock That Pays No Dividends Is Currently Priced at $40

Question 47

Multiple Choice

A stock that pays no dividends is currently priced at $40 and is expected to increase in price to $45 by year end.The expected risk premium on the market portfolio is 6% and the risk-free is 5%.If the stock has a beta of 0.6,the stock is


A) overpriced
B) underpriced
C) appropriately priced
D) Cannot tell from the given information

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