Assume the following data for a stock: Beta = 1.5; risk-free rate = 2 percent; market rate of return = 10 percent; and expected rate of return on the stock = 12 percent. Then:

The required rate of return from the CAPM is 12 percent, so the stock is undervalued.

The required rate of return from the CAPM is 12 percent, so the stock is overvalued

The required rate of return from the CAPM is 12 percent, so the stock is correctly priced

The required rate of return from the CAPM is 14 percent, so the stock is overvalued

The required rate of return from the CAPM is 14 percent, so the stock is correctly priced

The required rate of return from the CAPM is 14 percent, so the stock is undervalued.