Stock Y has a beta of 1.28 and an expected return of 13.7 percent. Stock Z has a beta of 1.02 and an expected return of 11.4 percent. If the risk-free rate is 4.1 percent and the market risk premium is 7 percent, are these stocks correctly priced?

Group of answer choices

Both stocks Y and Z are overvalued.

Both stocks Y and Z are undervalued.

Stock Y is overvalued and stock Z is undervalued.

Stock Y is undervalued and stock Z is overvalued.

Both stocks Y and Z are correctly priced.