Question: Given the following data for a stock: beta = 1.2; risk-free rate = 2%; market rate of return = 13%; and actual rate of return

Given the following data for a stock: beta = 1.2; risk-free rate = 2%; market rate of return = 13%; and actual rate of return on the stock = 16%. Then the stock is:

a.underpriced

b.cannot be determined

c. overpriced

d. correctly priced

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