Portfolio Management Q18

0. Miranda, an analyst, makes use of the capital asset pricing model to come up with the expected return of Stock X. She then estimates the return for Stock X using cash flow projections. The estimated return is higher than the return predicted by CAPM. She should conclude that Stock X is:

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Option : A
Explanation : A security is undervalued if the estimated return is higher than the return calculated using CAPM.

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