Powns, Inc. stock has a beta of 1.26 and an expected return of 12.5%. The risk-free rate of return is 3.0% and the market rate of return is 12.2%. Which one of the following statements is true given this information?

a. Powns stock is correctly priced.

b. The required return on Powns stock, based on the Capital Asset Pricing Model, is 9.88%.

c. Powns stock is underpriced.

d. Powns stock has less systematic risk than the overall market.

e. Powns stock is overpriced.