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Stock Y has a beta of 1.15 and an expected return of 12.1 percent. Stock Z has a beta of 0.8 and an expected return

Stock Y has a beta of 1.15 and an expected return of 12.1 percent. Stock Z has a beta of 0.8 and an expected return of 11.2 percent.

Required:

If the risk-free rate is 5.05 percent and the market risk premium is 7.55 percent, are these stocks correctly priced?

Stock Y	undervalued OR overvalued
Stock Z	overvalued OR undervalued

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