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Q3) You are considering investing in stock S and you want to know how stock S is related to the market portfolio M. Given your

Q3) You are considering investing in stock S and you want to know how stock S is related to the market portfolio M. Given your research, you discovered the following information: a) What is the exposure of stock S to market risk? (3 points) b) Discuss whether according to the CAPM, stock S is overvalued, undervalued or fairly valued and why. (2 points) c) What is the level of systematic and idiosyncratic risk for stock S? (5 points)

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