related problems

1. Security X has an expected rate of return of 13% and a beta of 1.15. The risk-free rate is 2%, and the market expected rate of return is 12%. According to the CAPM, security X is

A. overpriced

B. underpriced

C. Fairly priced

D. none of these answers

2. Continued with the previous question. What is the following about Security X is NOT correct?

A. Its predicted alpha is -0.5%

B. Its Treynor's ratio is 0.096

C. It must lie below the SML

D. It must lie above the SML