Consider the CAPM. Suppose that the risk-free rate is = 5%, the expected return on the market is

[ ] = 15%. A stock analyst has forecasted that Hewlett-Packard (HPQ) will have an actual return

of 20%. Further, assume that = 1.5. What can you conclude about HPQ stock based on this information? Please explain answer.

a) HPQ is overpriced

b) HPQ is underpriced

c) HPQ us fairly priced

d) There is not enough information