A friend of yours is taking a course in investments and is willing to apply the theory learnt in class in order to achieve her goal: invest only in those companies that are undervalued. Your friend estimates that an asset with zero beta on the market portfolio has an expected return of 3%for the next year, whereas another asset with beta on the market portfolio equal to two has an expected return of 15%for the same time period. Your friend tells you that she found a stock that, according to her, is underpriced. She believes that the CAPM holds and that the stock will pay a dividend equal to 8 USD in the next year. The beta of the stock is one. She also estimates that she will be able to sell the stock next year for 140 USD. a.Assuming that your friend is correct in her predictions, what could be the current price of the stock? b.If you instead believe in the Fama-French 3-factor model, and you know that this stock has small capitalization and high book-to-market ratio, would you suggest to your friend to stick to her strategy and buy that stock? Why? Elaborate in detail.