If an asset's expected return is less than its required return, rational investors will

buy the asset, since price is expected to increase

buy the asset, which will drive the price up and cause expected return to reach

the level of the required return

sell the asset, which will drive the price up and cause the expected return to

reach the level of the required return

sell the asset, which will drive the price down and cause the expected return to

reach the level of the required return