Stock X has an expected return of 10.7% and a beta of 0.9. Stock Y has an expected return of 17.9% and a beta of 2.4. Stock Z has an expected return of 13.5% and a beta of 1.5. The market risk premium is 7% and the risk-free rate is 3%. Which of the following statements is true?
A. Stock X is underpriced, Stock Y is overpriced, Stock Z is overpriced.
B. Stock X is fairly priced, Stock Y is underpriced, Stock Z is underpriced.
C. Stock X is over priced, Stock Y is overpriced, Stock Z is underpriced.
D. Stock X is fairily priced, Stock Y is fairly priced, Stock Z is overpriced.
E. Stock X is underpriced, Stock Y is overpriced, Stock Z is fairly priced.
