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From reading the financial press you find that the 10 year government bond is trading at a yield of 6.7%, and the return on the market is 11.2%. a. If a share has a beta (B) of 1.2, according to the Capital Asset Price Model (CAPM) what should it be returning? b. If it is actually returning 10.9%, is it over- or under-priced? Why? C. Construct a graph showing the Security Market Line (SML), and plot your results from (a) and (b) on it.

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