4. Your companys financial analysts have provided some data for a stock (IBM), the market, and a risk-free asset. Answer the following question using the information that they have provided:

Asset Return Variance

IBM 0.20 0.16

S&P 500 0.30 0.25

Risk-free asset 0.06 0.00

Covariance (IBM and S&P) 0.18

If the beta of IBM is 0.72, which of the following statements is true?

Group of answer choices

a. IBM's return should be 16.0; the stock is overvalued.

b. IBM's return should be 16.0; the stock is undervalued.

c. IBM's return should be 23.3; the stock is overvalued.

d. IBM's return should be 23.3; the stock is undervalued.