Q59.
| Easy Company | Bravo Enterprises | Estimated future rate of return | 12.0% | 11.5% | Beta | 1.25 | 1.00 |
If the risk-free rate of return is 5 percent and the market risk premium is 6 percent, the most appropriate conclusions about the value of the common stocks of Easy Company and Bravo Enterprises, respectively, are:
| Easy Company common stock | Bravo Enterprises common stock | A | Overvalued | Overvalued | B | Overvalued | Undervalued | C | Undervalued | Overvalued | D | Undervalued | Undervalued |
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