Question: 2. (8 points) Return 15% 10% 5% SML 1 2 Beta 6 Suppose a stock has a beta of 1.5, and its expected return

2. (8 points) Return 15% 10% 5% SML 1 2 Beta 6 Suppose a stock has a beta of 1.5, and its expected return is 15% predicted by your fundamental research. Within the context of the CAPM, and use the security market line (SML) graph above, is this stock underpriced, fairly priced or overpriced? Should you buy, sell, or hold the stock? Please show detailed calculation leading to your answers.

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