Question: The risk - free rate is 4 % . The expected market rate of return is 1 1 % . If you expect stock x

The risk-free rate is 4%. The expected market rate of return is 11%. If you expect stock x with a beta of .8 to offer a rate of return of 1.2%, then you should
A. buy stock x because it is overpriced
B. buy stock x because it is underpriced
C. sell short stock x because it is overpriced
D. sell short stock x because it is underpriced
The risk-free rate is 4%. The expected market rate of return

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