Stock A has a beta of 92 and an expected return of 904 perce

Stock A has a beta of .92 and an expected return of 9.04 percent. Stock B has a beta of 1.04 and an expected return of 9.51 percent. Stock C has a beta of 1.36 and an expected return of 11.68 percent. The risk-free rate is 3 percent and the market risk premium is 6.5 percent. Which of these stocks are underpriced?

A.A only

working note:

CAPM return = risk free rate + beta*[risk premium]

since stock A\'s expected return is more than CAPM return, the stock A is only underpriced.

stock	expected return	CAPM return
stock A	9.04	[3 + 0.92*6.5]=>8.98
stock B	9.51	[3+1.04*6.5]=>9.76
stock C	11.68	[3+1.36*6.5]=>11.84

Stock A has a beta of .92 and an expected return of 9.04 percent. Stock B has a beta of 1.04 and an expected return of 9.51 percent. Stock C has a beta of 1.36

Stock A has a beta of 92 and an expected return of 904 perce

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