Question: Your opinion is that security A has an expected rate of return of 12.5% and a beta of 1.5. The risk-free rate is 4.0% and

Your opinion is that security A has an expected rate of return of 12.5% and a beta of 1.5. The risk-free rate is 4.0% and the expected return on the market portfolio is 10.0%. According to the Capital Asset Pricing Model, this security is

a. underpriced.

b. overpriced.

c. fairly priced.

d. cannot be determined from data provided.

e. none of the above.

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