Suppose we observe two stocks with the following characteristics:

Stock K Expected Return - 20%, Beta 1.6

Stock L Expected Return - 12%, Beta 0.9

An asset is said to be undervalued if its price is too high given its expected return and risk. The risk-free rate is currently 6%. Is one of the two stocks overvalued relative to the other? Explain your answer fully (i.e., provide reasons why you think the stock is or is not overvalued).