At present, the risk-free rate is 5% and the expected return on the market portfolio is 11%. The expected returns for four stocks are given below. On the basis of these expectations, which stock(s) is(are) overvalued and which undervalued? Why?

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Stock Expected Return Expected Beta

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1. Dong Peng .200 1.2

2. Hua Wei .125 1.4

3. Bei Nan .100 0.8

4. Dong Xi .116 1.1