security market - Essay Prowess

security market

Use the information below for this problem:The risk-free rate is 0.65% and the expected market return is 8%.(a) Calculate the equilibrium expected rate of return for each security commensurate withits risk.(b) Calculate the expected rate of return for each security using the current price and the1y Target Est price.(c) Draw the security market line and show these securities on the graph. Indicate whetherthe securities are overpriced or underpriced.

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