Chapter 07 Practice Test Question 09 CAPM and Security Pricing Stock A has an expected return of 28% and a beta of 2.3. Stock B has an expected return of 28% and a beta of 1.9 when the risk free rate is 5%. Which of the following statements are correct? points Skipped 1. Stock A is underpriced relative to Stock B II. Stock B is underpriced relative to Stock A III. This situation is inconsistent with the CAPM IV. This situation is consistent with the CAPM eBook Multiple Choice Print References I and IV only ll and Ill only oooo II and IV only ) and Ill only