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Stock X is priced in the market to givean expected return of 8.1%and has a beta of 0.5.Stock Y has an expected return in the

Stock X is priced in the market to givean expected return of 8.1%and has a beta of 0.5.Stock Y has an expected return in the market of 11.3% and a beta of 1.2.Stock Z has an expected return in the market of 16.9%and a beta of 1.9.The market risk premium is 7%and the risk-free rate is 4%,Which of these stocks is underpricedin the market?

A.X

B.Y

C.Z

D.Y and Z

E.X and Y

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