Beta and Value A firm is expected to pay an annual dividend of $.70 next year. After next year the firms dividends will grow at a steady state rate of 5% per year. You are trying to value the stock and Value Line lists a stock beta of 1.62 while Yahoo is reporting a beta of 1.56. The stock is currently priced at $12.30. If E(RM) Rf = 7.2% and the risk free rate is 2.2% the stock is ____________________ if you use the Value Line beta and is ____________________ if you use the Yahoo beta. Multiple Choice underpriced by $1.53; underpriced by $1.23 overpriced by $4.40; overpriced by $4.00 overpriced by $4.00; overpriced by $4.40 underpriced by $1.23; underpriced by $1.53