An investor decides to form a portfolio by putting 40% of wealth in stock A and the rest in B. Below it shows the possible states of economy and the expected rate of return for each stock under each state. Given the information, what is the expected risk measured in standard deviation for stock A? Stock A Stock B State of Economy Probability of State Rate of Return Rate of Return Boom 20% 11% 22% Normal 50% 7% 11% Recession 30% -6% - 18% O 6.66% 10.37% O 15.31% 4.50% A stock has a beta of 1.36. The risk-free rate is 2.5 percent and the market return is 9.5 percent. The stock expects to return 11.58 percent. This stock is because the stock should be percent under CAPM prediction. undervalued; 12.02 O overvalued: 12.02 overvalued; 15.42 undervalued; 15.42 A stock has a beta of .74. The risk-free rate is 2.5 percent and the market risk premium is 8.3 percent. The stock expects to return 8.88 percent. This stock is because the stock should be percent under CAPM prediction. O overvalued: 8.64 O undervalued; 6.79 O overvalued; 6.79 undervalued: 8.64