Home Interior's stock has an expected return of 13.25% and a beta of 1.4. The market return is 10.75% and the risk-free rate is 4.5%. This stock is ________ because the CAPM return for the stock is ________%.
A)greatly overvalued; 16.50
B)slightly overvalued; 14.91
C)priced correctly; 13.25
D)slightly undervalued; 12.91
E)greatly undervalued; 16.50

Question

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The Answer of Home Interior's stock has an expected return of 13.25% and a beta of 1.4. The market return is 10.75% and the risk-free rate is 4.5%. This stock is ________ because the CAPM return for the stock is ________%.
A)greatly overvalued; 16.50
B)slightly overvalued; 14.91
C)priced correctly; 13.25
D)slightly undervalued; 12.91
E)greatly undervalued; 16.50

Home Interior's Stock Has an Expected Return of 13