Consider the three stocks; stock X, stock Y and stock Z that has the following factor loadings (or factor betas).

Stock	factor 1 loading	factor 2 loading
x	-0.55	1.2
y	-0.10	0.85
z	0.35	0.5

The zero-beta return (₀) = 3%, and the risk premia are ₁ = 10%, ₂ = 8%. Assume that all three stocks are currently priced at $50

a) The expected returns for stock X, stock Y, and stock Z are

b) The expected prices one year from now for stocks X, Y, and Z are

c) If you know that the actual prices one year from now are stock X $55, stock Y $52, and stock Z $57. Determine whether the stock is undervalued or overvalued.