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    CAPM and Expected Return on Market Portfolio

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    CAPM and Expected return. If the risk-free rate is 6 percent and the expected rate of return on the market portfolio is 14 percent, is a security with a beta of 1.25 and an expected rate of return of 16 percent overpriced or under priced?

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    https://brainmass.com/statistics/central-tendency/capm-expected-return-market-portfolio-122395

    Solution Preview

    According to the CAPM model
    Expected rate of return= Risk free ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer if the risk-free rate is 6 percent and the expected rate of return on the market portfolio is 14 percent, is a security with a beta of 1.25 and an expected rate of return of 16 percent overpriced or under priced.

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