Compute the alpha and use it to determine whether the following stock, XFintech, is fairly priced, overpriced or underpriced. Show all computations that you used to justify your answer.

Beta of XFintech = 2

Expected inflation = 2%

Market risk premium = 5%Real risk-free interest rate = 1%

Your forecast return on XFintech = 10%

b) Discuss the assumptions of the CAPM related to the individual behavior and their implications to investing.