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Stock Bs beta coefficient is b B = 1.2. The risk-free rate is 5 percent, and the expected return on an average stock is 11

Stock Bs beta coefficient is b_B = 1.2. The risk-free rate is 5 percent, and the expected return on an average stock is 11 percent. The current price of Stock B, P₀, is $80; the next expected dividend, D₁, is $3.20; and the stocks expected constant growth rate is 4 percent. Which of the following is correct?

a.	Stock B is undervalued. Its price will fall to restore equilibrium.
	b.	Stock B is fairly priced and in equilibrium.
	c.	Stock B is overvalued. Its price will rise to restore equilibrium.
	d.	Stock B is undervalued. Its price will rise to restore equilibrium.
	e.	Stock B is overvalued. Its price will fall to restore equilibrium.

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