Simone holds a portfolio that is invested equally in three stocks, such that py=1/3. Each stock is described in the following table: Stock DET AIL INO (Percent Beta Standard Deviation 0.7 1.0 1.6 16 any ALCHI 25% 38% 34% MA An analyst has used market and firm-specific information to make expected return estimates for each stock. The analyst's expected return estimates may or may not equal the stocks' required returns. Expected Return The risk-free rate (rap) is 6%, and the market risk premium (RP) is 4%. Use the following graph with the security market line (SML) to plot each stock's beta and expected return. Tool tip: Mouse over the points on the graph to see their coordinates. 8.0% 10.0% 13.5% Stock DET Stock All 16 14 12 RATE OF RETURN (Percent) OF 20 5 2 to 0: 02 04 06 08 10 12 RISK (Beta) + 16 18 20 Stock DET A Stock All Stock INO A stock is in equilibrium if its required return equals its expected returri. In general, assume that markets and stock are in equilibrium (or fairly valued), but sometimes investors have different opinions about a stock's prospects and may think that a stock is out of equilibrium (either undervalued or overvalued). A stock is in equilibrium if its required return equals its expected return. In general, assume that markets and stock are in equilibrium (or fairly valued), but sometimes investors have different opinions about a stock's prospects and may think that a stock is out of equilibrium (either undervalued or overvalued). Use the analyst's expected return estimates to determine if this analyst thinks that each stock in Simone's portfolio is undervalued, overvalued, or fairly valued. Which of the following statements are true? Check all that apply. Stock DET is fairly valued O Stock All is undervalued Stock INO is fairly valued Stock INO is undervalued