An analyst gathers the following data:

* Expected (estimated) rate of return on the market = 15%

* Risk Free Rate = 8%

* Expected (estimated) rate of return on stock X = 17%

* Stock X's beta = 1.75

Using these data and the capital asset pricing model, which of the following statements about X's stock is true? Stock X is:

a.

properly valued

b.

overvalued by 1.75%

c.

undervalued by 1.40%

d.

undervalued by 0.25%