A stocks = 1.6. We observe rRF = 4% and E(rM) = 12%. At this moment in the stock market, the actual rate of

A stock’s ß = 1.6. We observe rRF = 4% and E(rM) = 12%. At this moment in the stock market, the actual rate of return for the stock is 13%. Is the stock overvalued or undervalued? Explain.