Last year you invested in two stocks. The risk-free rate was 4% and the market risk premium was 6%. The stock performance for the past year is given...
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Last year you invested in two stocks. The risk-free rate was 4% and the market risk premium was 6%. The stock

performance for the past year is given below:


-Stock A:

Beta: 1.25

1yr Return: 11.2%


-Stock B:

Beta: 0.85

1yr Return: 9.3%


You use CAPM to evaluate the performance of your investment. Which stock(s) have outperformed the CAPM expected return?

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