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Stock X has an expected return of 10.7% and a beta of 0.9. Stock Y has an expected return of 17.9% and a beta of

Stock X has an expected return of 10.7% and a beta of 0.9. Stock Y has an expected return of 17.9% and a beta of 2.4. Stock Z has an expected return of 13.5% and a beta of 1.5. The market risk premium is 7% and the risk-free rate is 3%. Which of the following statements is true?

A. Stock X is underpriced, Stock Y is overpriced, Stock Z is overpriced.

B. Stock X is fairly priced, Stock Y is underpriced, Stock Z is underpriced.

C. Stock X is over priced, Stock Y is overpriced, Stock Z is underpriced.

D. Stock X is fairily priced, Stock Y is fairly priced, Stock Z is overpriced.

E. Stock X is underpriced, Stock Y is overpriced, Stock Z is fairly priced.

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