Stock Alpha has a beta of .79 and a reward-to-risk ratio that is less than the reward-to-risk ratio of Stock Omega. Omega has a beta of 1.12. This information implies that:

Multiple Choice

1. Alpha is less risky than Omega and both stocks are correctly priced.

2. Alpha is less risky than Omega and both stocks are fairly priced.

3. either Alpha is overpriced or Omega is underpriced or both.

4. Alpha is riskier than Omega and both stocks are fairly priced.

5. either Alpha is underpriced or Omega is overpriced or both.