Expected market risk premium = 5.9%; Risk free rate = 4.1%; Beta of Stock A = 1.37. An analyst has estimated the expected return of Stock A as 11.77 percent. According to the Capital Asset Pricing Model, Stock A is 

• Underpriced because the CAPM required expected return of Stock A is 6.57% 
• Overpriced because the CAPM required expected return of Stock A is 6.57% 
• Overpriced because the CAPM required expected return of A is 12.18 percent. 
• Underpriced because the CAPM required expected return of A is 12.18 percent.

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