Most traders/investors believe TLY stock to have a beta of 1.2 while you feel that its risk is underestimated and is truthfully 1.3. If the risk-free rate for the next year is 1% and the consensus market expectation is 6% expected return then what is the minimum rate of return you require to hold TLY and what action will you likely take?

1. I would demand 7% and will buy TLY as its price will be too low
2. I would demand 7.5% and will buy TLY as its price will be too low
3. I would demand 7.5% and will sell TLY as its price will be too high
4. I would demand 8.2% and will buy TLY as its price will be too low
5. I would demand 8.8% and will sell TLY as its price will be too high