Suppose the current market return is 15%, the risk-free rate is 0.5% and beta for Amazing Inc. is 1.2. If you have the stock and the company stocks expected return is 18.5%, what should you do?

It is undervalued and you should invest

Since the stock's alpha is zero, it is correctly valued

It is overvalued and you should invest

It is overvalued and you should not invest

It is undervalued and you should not invest